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IPE special report May 2018

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Danish pensions body counters political pressure to invest for growth

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Danish pension funds have already invested DKK220bn (€29.5bn) in Danish business and are keen to help create more growth in the domestic economy, according to industry association Forsikring & Pension (F&P).

But the risk of such investments has to match the return, it insisted. 

The association’s chairman Christian Salgild told F&P’s annual meeting: “All my warning lights start to flash when the political side proposes that pension funds invest in companies and sectors considered risky by banks and the FSA, while at the same time those businesses are making big investments in production and jobs abroad.”

However, his main message should not be misunderstood, he said.

He said the pensions and insurance industry already contributed very significantly to investment and growth in Denmark and wanted to step up efforts, as long as the return matched the risk.

New figures from F&P show the pension funds have DKK220bn invested in Danish business.

Of this, DKK125bn was in property, DKK85bn in shares, corporate bonds and loans, and DKK10bn in infrastructure, wind energy and public-private partnerships (PPPs), according to the association’s data, covering 85% of the pensions market. 

“I understand politicians’ desire for more pensions money to go into Danish companies,” said Salgild. 

But politicians also have to understand the world in which pension funds operate, he said.

“We are obliged – legally, too – to safeguard pension savers’ interests first and foremost,” he said.

Sagild said the problem facing investment and growth in Denmark was not that Danish companies were caught in a credit crunch.

The main problem was rather that the Danish economy was growing too slowly and that Denmark was not nearly as attractive an investment location as other countries.

“In a globalised world, it is first and foremost the cost level that determines where companies place their production,” he said.

“And this, therefore, also determines which countries and regions will experience growth and increased employment.”

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