Danica calls for full disclosure of pension costs
DENMARK - The managing director of Denmark's Danica Pension promised full disclosure of the company's pension costs and said legislation may be called for if others do not follow suit.
Danica has pledged that from 1 January 2010 it will let customers see the total costs of their pension plan, including a new key figure giving annual costs in both Danish kroner and as a percentage (ACK and ACP).
Managing director Henrik Ramlau-Hansen has now promised that this new insight into costs will not ignore the so-called hidden costs.
In his capacity as vice chairman of the Danish Insurance Association (F&P), he said that if other pension companies do not publish their total cost figures, he might ask the country's parliament to pass legislation to "encourage" them to make the disclosure.
Danica is part of Danske Bank, and one of the biggest commercial pension providers, with group assets under management of around DKK250bn (€33.6bn).
"If the plan to introduce transparency is not implemented by all firms, then we will discuss this at the Danish Insurance Association. We will not start out by asking for legislation - we will only do this if we cannot solve it ourselves," said Ramlau-Hansen.
He acknowledged that the industry's image had suffered because it had dragged its feet over the issue of publishing all the costs of plans. "The industry had certainly created a really bad image. But we do want to co-operate to improve this and so we are now going to clear this particular path," he said.
The new ACK and ACP figures from Danica will include investment costs in the individual funds which make up the Danica Balance unit link pensions. Another new figure to be disclosed will be the provisions that the Danica group makes.
Danica said that it believed by publishing the ACK and ACP figures, it would probably be the first European company to reveal all costs associated with their pension products.
Nearly two years ago, the Danish Insurance Association issued voluntary guidelines for pension providers to show customers the real cost of products. The new model was designed to give consumers more information about the "hidden" costs of pensions, as plans had been the subject of public criticism.
The Danish Insurance Association said it is now implementing the final phase of its initiative to increase transparency on pension costs.
"This means that from 2010, total investment costs will be disclosed to individual customers," it said. "This is happening as part of the plan for the industry's costs initiative which the companies are following. The Danish Insurance Association will monitor their implementation closely."