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New pension research centre in Denmark secures DKK12.5m in funding

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A new research centre on pensions has begun work in Copenhagen with DKK12.5m (€1.7m) in funding over the next five years, with the aim of increasing knowledge of the subject through research and helping develop the industry sector in Denmark.

The Pension Research Centre (PeRCent) started up in January at Copenhagen Business School (CBS), having secured funding from the industry, as well as the business school itself.

CBS professor Carsten Sørensen, one of the centre’s three leaders, told IPE: “We hope to provide excellent research output in the period so that the centre may continue receiving external funding from the pension sector in Denmark also, in continuation of this five-year period.”

As well as producing this research, the centre will develop pension courses for CBS students.

“We will work to develop a minor in pensions for our many master students in finance and/or economics at CBS,” he said.

These courses – and perhaps the minor – will also be available for masters students at other universities, Sørensen said.

Funding has been pledged by the pensions sector to the tune of DKK2m per year for the first five years, and CBS will top this up with an extra 25%, or DKK500,000 a year, for five years.

The centre aims to put on a “flagship” conference once a year, as well as workshops and possibly other activities to bridge ideas, knowledge and learning between practitioners and academics interested in pension issues, Sørensen said.

The first flagship event will be held in June, focusing on the pension sector investing in a low interest-rate environment.

Right now, this is one of the two main challenges Sørensen sees facing the Danish pensions industry, the other being the increasing number of people becoming pensioners who will need to sustain their level of living based on pension savings.

The centre already has a number of research projects in progress, including one on forecasting stock returns for long-term investors, one on the implications of credit constraints on retirement saving decisions and another on the macroeconomic effects of longevity adjustment of the retirement age and pension benefits.

The three directors – all professors at CBS – are Sørensen, Svend Erik Hougaard Jensen from the department of economics and Jesper Rangvid from the department of finance.

“Other academics involved in the centre are mostly other researchers from the department of economics and the department of finance at CBS,” Sørensen said.

“But there will also be a few academics from other universities – both in Denmark and outside Denmark – involved.”

Besides Lærernes Pension and PensionDanmark, the centre’s list of sponsors from the industry includes ATP, Danica Pension, Industriens Pension, Nykredit Livsforsikring, Topdanmark, SEB Pensionsforsikring and Skandia Livsforsikring.

Though the centre will work closely with the pension sector, including people working at pension funds and providers on its advisory board, Hougaard Jensen stressed it would maintain academic objectivity.

“The cooperation with the pension sector is an essential part of PeRCent,” he said. “It provides us with a direct dialogue so we can coordinate our work with the sector continuously.

“But, of course, we are not in the sector’s pocket, and the research we do is independent.”

Torben Andersen, professor at Aarhus University – who is currently chairman of the Pension Commission in Denmark – will chair PeRCent’s advisory board.

Other members of the advisory board are Peter Løchte Jørgensen, also a professor at Aarhus University; Susan Christoffersen, professor at the University of Toronto; Möger Pedersen; Brüniche-Olsen; Per Bremer Rasmussen, chief executive of industry association Forsikring & Pension; Danica’s chief executive Per Klitgaard; ATP chief executive Carsten Stendevad; and Laila Mortensen, chief executive of Industriens Pension.

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