DIP, the pension fund for Danish engineers, has said the merger of its administration activities with those of JØP, the pension fund for lawyers and economists, would incur one-off costs this year but lead to savings from 2016 onwards.
Reporting financial results for the first half of this year, the fund said in its interim report: “The amalgamation of the the two pension funds’ administration has resulted in several overlapping jobs … having been cut, which will lead to a one-off cost in 2015, but there will be cost savings in 2016 and thereafter.”
It said it already reaped cost benefits from having a joint investment department with JØP.
The two pension funds merged their investment operations two years ago.
This had brought more than DKK10m (€1.34m) in annual investment management cost savings between the two funds, it said.
DIP’s investment returns in the first half were boosted by equities but bonds made a loss.
The overall investment return rose to 4.9% between January and June, up from the 4.5% reported for the same period last year, with equities returning 9.8%.
The bond asset class – which, for DIP, consists of government and mortgage bonds – ended the six-month period with a 0.9% loss, mainly because of price falls as a result of yield rises in the second quarter of the year.
Contributions rose by 4.2% to DKK419m in the reporting period, and total assets climbed to DKK37bn at the end of June from DKK36bn at the end of 2014.
Meanwhile, JØP reported an investment return for the first half of 3.1% overall, or DKK2bn in absolute terms.
Equities generated a 10% return, but bonds made a loss of 1.7% because of yield rises over the period, it said.