DENMARK - Danish pension fund PenSam could lose some pensions investment business if a union proposal to change conditions in its labour-market agreement goes through.
Following complaints about poor returns, PenSam’s traditional partner, trade union FOA, proposed allowing members to choose who invests their pension pot.
The proposal forms part of the FOA’s demands for next spring’s collective bargaining round.
The union has 200,000 members who work in Denmark’s social, health and childcare sectors.
A spokesman for the FOA said: “There have been, during the last 10 or 15 years, some critics among members of the FOA due to poor results from PenSam. We have now responded to this criticism.”
As things stand, PenSam is the only administrator of FOA members’ pension savings.
The union said it assumed all 360,000 of PenSam’s customers would be included in the proposed change.
The FOA spokesman said that pensions investment was only one of two basic elements of its labour-market pensions agreement with PenSam.
The other is insurance, and this part of the agreement will not be changed.
PenSam pointed out that the proposed change to allow individual customers to choose an external administrator to invest their pension savings had yet to be agreed upon in the 2013 pay round.
“From PenSam’s side, we welcome the proposal to increase choice,” the fund said in a statement.
“Since the plan is still only a demand, it is too early to say something concrete about what a given model will look like.”
In its first-half report earlier this year, PenSam acknowledged media criticism about unsatisfactory distribution of pension statements, high costs and low investment returns.
It blamed the relatively low returns in the past on the low level of investment risk it had taken.
However, in 2010, the organisation adopted a more active and aggressive strategy, it said, which had improved returns relative to competitors.
The FOA said it was not dissatisfied with PenSam.
“The accumulated interest over the last two and a half years has been at the top of all Danish providers,” the spokesman said.
“We assume that a very large majority of PenSam customers will keep their old-age savings with PenSam as their administrator.”
He said the union was currently researching the market for potential alternative pensions investment providers.
PenSam had total assets under management of around DKK100bn (€13.4bn) at the end of 2012.
Labour-market pension scheme Sampension weighed into the debate in Denmark on investment choice within collective pension agreements, saying few customers took advantage of such options.
“For more than 10 years, Sampension has offered customers good opportunities to decide for themselves how some of their pension savings should be invested, via a Link-plan,” it said.
The Linkpension plan allowed individuals to place their pension assets with a range of investment managers including Carnegie, Jyske Invest and Nykredit Invest, it said.
“However,” it added, “only a few customers have chosen Linkpension, but, for several years, Sampension has also had some of the best returns in the industry.”