DENMARK - FSP Pension, the labour market pension fund for the financial sector, saw a swing in profit at the half-year stage to positive from negative, as results benefitted from a drop in pension provisions after thousands of scheme members switched to unit-linked products.
In its interim report for January to June, FSP reported net profit of DKK153m (€20.5m), compared with a loss of DKK395 in the same period last year.
In a statement, the fund said: "Profit was positively affected by a fall in pension provision, partly because of rising interest rates during the six months and partly as a results of the Pension Vote 2011, when 8,500 members followed the board's recommendation to switch investment to unit-link."
At the end of last year, the fund had warned that, if most customers stayed in the guaranteed schemes, there was a risk FSP would be unable to meet the new capital requirements, which might increase 3-4 times.
FSP's capital base stood at DKK1.57bn at the end of June, and total assets rose to DKK22.7bn.
FSP said it was now DKK1.1bn clear of the red light in the Danish FSA's traffic light solvency risk scenario.
Contributions rose to DKK309.4m from DKK287.8m.
In other news, investment returns fell at labour-market fund PensionDanmark in the first six months of the year, but were still positive by the end of August despite unsteady market conditions.
The pension fund itself reported a DKK2bn investment return, after DKK6.5bn in the same period a year earlier.
By the end of August, returns for the various age-funds stood at between 1.4% and 4.1%
Torben Möger Pedersen, managing director of the DKK110bn fund, said: "We have organised our investment policy so that it is robust in all kinds of weather.
"PensionDanmark's age-funds (segments of the pension fund relating to certain age groups of members) have a significant diversification and therefore have come out well in the last few months' turbulence on the markets."
Since the end of June, declines in equities prices were offset to a significant degree by solid profits on investments in state and mortgage bonds, private equity and property, PensionDanmark said.
"Because of this, all age-funds continued with positive returns," it said. "For younger members under 41, where share price falls weighed more heavily than interest-rate declines, the pre-tax return fell to 1.4% from 2.3% as at the end of August."
However, for 65-year-old members, for whom interest-rate falls weighed more heavily than weaker stock prices, the return rose to 4.1% from 1.6%, the fund said.
Contributions climbed 6% to DKK5.2bn, while total assets grew by DKK4.3bn to just over DKK110bn. Pre-tax profit stood at DKK200m.
PensionDanmark also announced it is investing DKK52m in sustainable energy in sub-Saharan Africa via a fund.
The new fund, DI Frontier Market Energy & Carbon Fund, focuses on investing in sustainable energy plants in sub-Saharan Africa.
It is being financed by several institutional investors from Denmark and elsewhere, including PFA Pension, TrygVesta and Danica. The institutions are expected to contribute a total of DKK600m to the fund.
Managing director Möger Pedersen said: "It is an undiscovered market with big economic potential and therefore also one with good opportunities to get a good return on our investment."
PensionDanmark has previously invested DKK200m in quoted companies in 10 countries in central Africa, including Nigeria, Kenya, Botswana and Mauritius.
The investments are spread across various sectors, with the retail, telecommunications and financial sectors making up more than 70% of the total.