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Danish roundup: PensionDanmark, PFA, Pensions Commission

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PensionDanmark reported an 18.1% rise in its investment profit in the first quarter, with returns spread more evenly across asset classes than they had been in the year-earlier period. 

The Danish labour-market pension fund said investment profit before tax rose to DKK4.24bn (€568m) in the January-to-March period, up from DKK3.59bn in the same period last year.

Torben Möger Pedersen, managing director, said: “In contrast to 2013, when equities did significantly better than the other asset classes, this quarter’s return from individual asset classes was more equally spread.”

He said the pension fund was very satisfied with the first-quarter results, with its aim being to secure good returns for its members at low risk.

In terms of returns to members in the first quarter, the return for 40-year-old scheme members fell to 2.6% in the quarter before tax from 3.5% in the same period last year.

For 65 year olds, the pre-tax return rose to 3% from 1.7%.

However, PensionDanmark said that, for both groups, the return had increased since the end of the reporting period to stand at 4.2% and 4.6%, respectively, year-to-date.

Total assets rose to DKK157.4bn from DKK142bn, while pension contributions increased strongly between the first quarters of 2013 and 2014, climbing to DKK3.73bn from DKK2.55bn.

PensionDanmark said this growth was due to extraordinarily large transfers, notably a transfer of DKK1.2bn from Industriens Pension, which was only accounted for in the first quarter of 2014 for technical reasons. 

Meanwhile, Denmark’s largest commercial pensions provider PFA announced it would merge its subsidiary PFA Asset Management (Kapitalforvaltning) with PFA Portfolio Administration to deal with increasing regulatory and reporting demands. 

The two units will be combined under the new name of PFA Asset Management. 

All current staff employed in both subsidiaries will continue to work in the new unit.

The merger will be carried out after approval is received from the Danish FSA (Finanstilsynet), expected to come in September.

The new unit will be included in the accounts with effect from the beginning of January 2014.

PFA said: “The merger is happening as a result of the big increase in regulation and reporting to the authorities, which has made a simplification of the company structure appropriate.”

Poul Kobberup and Jesper Langmack will be the two directors of the new subsidiary.

PFA said the basis for the new company was that all employees would remain in place, which it said would strengthen areas that now overlap, such as compliance, risk management and administration. 

In other news, tax minister Morten Østergaard has now named the remaining four members of the new Pensions Commission, and said the group will now begin its work.

The four members are Jørgen Elmeskov, national statistician at Statistics Denmark; Carsten Tanggaard, professor at Aarhus University; Lisbeth Pedersen from SFI, the Danish National Centre for Social Research; and Nabanita Datta Gupta, professor at Aarhus University.

Torben Andersen, economics professor of Aarhus University, was named a fortnight ago as chairman of the commission, which is being formed to find solutions to the twin problems faced by the Danish pensions industry of complex rules and high taxation.

Østergaard said: “The issue the pension commission must find solutions to is very important but also very complex.”

There were no easy answers, he added.

Andersen said he was pleased with the composition of the commission, and that the members had the knowledge to cover the issues outlined in the terms of reference.

However, the commission’s work will also involve key stakeholders and organisations, the tax ministry said.

Experts from the pensions industry will be continuously involved in the work, it added.

“The pension industry has a lot of knowledge in this area, as it will be quite foolish not to draw on,” Andersen said.

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