DENMARK - PFA Pension has signed a deal with an employers' organisation that could see as many as 22,000 new members joining the commercial provider's pension scheme.

The Federation of Grocers (De Samvirkende Købmænd) entered into a joint pensions agreement with PFA on behalf of its 1,500 members to provide them with the workplace pension product PFA Plus for their staff.

PFA said the organisation had used its bulk purchasing power to get cheaper and better pension conditions with the agreement, which took effect on 1 October.

The trade body's members are grocery retailers including chains such as 7-Eleven and Spar, and together employ around 22,000 staff.

PFA Pension's group director Lars Ellehave-Andersen said: "We look forward to working with the grocers in the coming year. We are already in a strong position in the sector, and that gives employees particular advantages because they now do not need to change pension provider when they change job."

Job changes are frequent in the grocery sector, said John Wagner, managing director of the Federation of Grocers.

The PFA Plus product is based on the unit-link principle, allowing individual members to choose their own level of risk, PFA Pension said.

Separately, PFA Pension said it was cutting its account dividend on with-profits pension products to 2.75% next year from 3.5%, citing falls in prevailing interest rates.

Interest rates had fallen significantly in Denmark during 2011, and the European Central Bank was expected to cut rates further in the New Year, which would add to pressure, the group said.

"The lower interest rates are a result of the economic slowdown," it said. "Against this background, PFA's board decided to change the account dividend from 3.5% to 2.75% before tax for customers with the traditional average yield product from 1 January 2012."

Including the extra yield PFA customers receive due to the organisation's customer-owned status of at least 0.36%, the total account dividend will be at least 3.11% before tax, it said.

The account dividend relates to all four yield groups in the with-profits product.
PFA stressed that its reserves remained robust.

"PFA Pension has stayed in the Danish FSA's green light all through 2011 and has no withdrawal penalty for customers," it said.

Meanwhile, FunktionærPension, the DKK11.7bn (€1.4bn) labour-market pension fund for office workers, has warned members it may impose a withdrawal penalty on its with-profits pension scheme.

The fund said: "In this coming period, it might become necessary for FunktionærPension to activate a withdrawal penalty for members with pension schemes in the average yield product, FPg."

It pointed out that this measure was introduced when market values of investments were lower than the stated value of members' deposits.

Two Danish pension funds currently have withdrawal penalties in operation for specific customer groups - Danica Pension and Skandia.