Labour-market pension provision for engineers in Denmark has moved one step closer to unity after the two main industry pension funds signed a letter of intent with the Danish Society of Engineers (IDA).

The parties have specifically agreed that, from April next year, all contributions from new members joining the engineers’ pension fund ISP will be directed into the DIP pension fund for the profession.

Earlier this year IDA proposed merging the two funds into a new DKK51.1bn (€6.9bn) fund to be called IDA Pension.

After talks resulting from that proposal, DIP, ISP and IDA have now signed a letter of intent in which ISP agreed to work to ensure the most economically advantageous arrangements for current and future members in a single pension fund, ISP said.

DIP originally covered only civil and academic engineers, while ISP Pension provided plans for technical and diploma-level engineers. Now both funds include all these types of engineers and other science graduates in their memberships.

Peter Falkenham, chairman of DIP’s supervisory board, said: “I am extremely pleased with the content of the letter of intent and look forward to further work with the parties.”

However, Lars Bytoft, chairman of the ISP supervisory board responded more cautiously, saying it was best for the scheme’s members to wait and see how the planned merger between DIP and the lawyers’ and economists’ pension fund JØP panned out.

The DIP/JØP merger is scheduled to take place in 2019.

“The merger between ISP and the merged pension fund (DIP and JØP) is expected to occur in 2020, provided that the expected potential of the merger in terms of cost savings can be achieved,” Bytoft said.

ISP said it had also received an offer to merge with commercial mutual provider AP Pension, but that this had been rejected.

However, ISP said it would continue to employ AP Pension as manager for the next few years.

ISP outsourced all its activities to AP Pension several years ago but retained its independence as a pension fund.

Danish financial daily newspaper Børsen reported yesterday that the merger would result in more than DKK16bn of pensions assets being taken away from AP Pension. A spokesman for AP Pension said it had no comment on the report.