Denmark’s two labour-market pension funds for engineers – DIP and ISP – may finally be set to merge after the Danish Society of Engineers (IDA) formally proposed a union between the two funds.
Thomas Damkjær Petersen, IDA’s chairman, said: “Our members are best served by coming under the same roof, and at the same time, many of them find it hard to understand why we support two different pension funds.”
The chairmen of DIP and ISP have been invited by IDA to a meeting on 5 April to discuss how to proceed.
IDA said it was “annoying” that sporadic discussions over the past 20 years about a possible merger between the two funds had ended with the conclusion that the time was not right.
“Everyone can see that the pension funds’ members would have benefited if a merger had happened 10 or 20 years ago,” the association said.
DIP originally covered just civil and academic engineers, while ISP Pension provided plans for technical and diploma-level engineers. Both funds now include all these types of engineers as well as other science graduates.
Together, the new fund – to be called IDA Pension – would have assets of around DKK51.1bn (€6.9bn), lifting it to number 15 in IPE’s ranking of Danish pension funds by asset volume. In 2016 DIP ranked number 17, and ISP Pension ranked number 20.
Lars Bytoft, chairman of ISP, told the association’s in-house publication Ingeniøren (The Engineer) that his board would consider a merger as long as it ensured the same or better financial position for members of ISP.
Four years ago, ISP decided to outsource all its activities to AP Pension, having declined an offer from DIP to merge, according to the publication.
DIP chairman Peter Falkenham said he was very positive overall about the merger idea.
“We think it is sensible for engineers to join forces within one pension fund because of the heavy weight of regulation and the high level of reporting requirements there are in the sector,” he said.
DIP is already in a close cooperative agreement with lawyers’ and economists’ pension fund JØP, called P+, and the pension funds recently announced their intention to pursue a full merger.
Damkjær Petersen suggested a model for the merger involving current savings in each pension fund continuing to be managed as closed schemes by P+ and AP Pension, while new contributions would go into a newly established IDA Pension fund.
Individuals could then have the opportunity to opt to move their savings into the new fund, he said.