DENMARK - Denmark's DKK90bn (€12bn) Industriens Pension is switching its entire with-profits based pension scheme to a unit-linked basis, citing fairness as the main reason for the transfer.
The move will take effect in December and trigger windfalls to the accounts of the pension fund's 400,000 scheme members, equating to around 20% of their savings, the fund said.
The one-off payments will happen as the fund distributes the DKK13bn collective savings pool, which has been built up to ensure an annual yield on members' accounts under the with-profits conditions.
Once the scheme is unit-linked, the pool will no longer be needed, Industriens Pension said.
Chairman Mads Andersen said: "It is first and foremost to make the pension scheme fairer that we have decided to go to unit-link."
He said that, at the moment, it was unreasonable scheme members could not take all the money with them they had contributed to saving up, were they to get a job outside the sector and join another pension scheme.
"When Industriens Pension changes to unit-link, this unintentional injustice will disappear," the pension fund said.
The move follows developments on the pensions market, which has seen many companies changing to unit-link from with-profits over the last few years, it said.
The labour market pension fund, which covers employees in the industrial sector, stressed that upcoming Solvency II demands were not behind the step.
"Industriens Pension is not under pressure economically to carry out this change," it said. "The company controls large reserves and has no problems meeting the increased solvency requirements from the EU. The change is happening solely to ensure the best possible pension scheme for members."
Pensioners and those approaching retirement will not be affected by the move, it added.
In other news, contributions at Danish commercial pension fund PFA were up 14% at the end of June compared with the previous year, showing the market is almost back to its pre-crisis state, the fund said.
The investment return for the first six months of this year was down at DKK790m from the DKK18.4bn reported for the 2010 first half.
But PFA said in its interim report that the return had bounced back in July and August on the back of falling interest rates.
Chief executive and group head Henrik Heideby said: "After the end of the accounting period, there was major turbulence on the capital markets.
"There were hefty price falls on stock markets. At the same time the bond-yield level fell.
"The latter has had a bigger impact on our investment return after the half-year stage than the stock market losses."
By mid-August, the investment return had reached more than DKK9bn, the fund said.
In the January to June period, customers paid DKK9.3bn in gross contributions, up DKK1.2bn from the same period in 2010.
The fund said: "This is a satisfactory and controlled rate of growth of 14.6%, which shows the market is just about back to the time before the financial crisis, which made companies reticent about adjustments to pensions."
PFA said it had seen significantly more interest in saving into unit-link products.
Contributions here accounted for 36% of total contributions at the end of June, a proportion that was higher from the 25% seen at the beginning of the year.
Group pre-tax profit fell to DKK121m from DKK432m, while total assets rose to DKK289.4bn from DKK277.4bn.
PFA's solvency coverage rose to 192% from 178%.