MP Pension, the Danish labour-market pension fund for academics, reported an upswing in investment returns in 2016 compared to the year before, with investments generating a profit of 8.6% — almost twice the 4.4% return posted for 2015.
Niels Erik Petersen, CIO of MP Pension, said: “Overall, we are very pleased with the result for 2016, which contained many major events both economically and politically.”
The pension fund reported that high-yield and emerging markets bonds had contributed to the total investment result with returns of around 15%.
Petersen said financial markets had been marked by a high level of nervousness in 2016, particularly in the run-up to the EU membership referendum in the UK and the US presidential election.
“At the same time we saw the American central bank raising interest rates for the first time in a long period, and warning of further rate rises to come in 2017,” he said.
MP Pension, which has assets of around DKK89bn (€12bn) and 118,000 members, is undergoing changes following the collapse of its joint administration and investment arrangement with the Architects’ Pension Fund (AP) and the Pension Fund for Agricultural Academics and Veterinary Surgeons (PJD).
The three pension funds were run by Unipension for several years, but AP and PJD decided to move their schemes to labour-market pensions provider Sampension, with MP Pension continuing alone.
Meanwhile, Pædagogernes Pension (PBU), the Danish pension fund for education practitioners, reported an 9.6% return for 2016, which it claimed was the best pensions return among all schemes where returns were based directly on underlying investment performance.
In 2015, the pension fund made a 3.7% return before pensions return tax. In absolute terms, PBU’s 2016 return was DKK8.4bn.
Sune Schackenfeldt, PBU’s chief executive, said: “We have delivered returns though good old-fashioned means — simply by pulling on the right levers at the right time.”
Schackenfeldt said PBU had to be able to deliver on both the “hard” and the “soft” bottom-lines — the latter being about ethics and a responsible investment policy.
“Education practitioners do not earn very much money, and therefore they do not put away much in savings,” he said. “Because of this, it is really important that we as a pension provider perform on the hard parameters such as returns and costs.”
Schackenfeldt took up the top role at PBU last August, having been hired away from Denmark’s biggest commercial pension provider PFA Pension, where he was a director.