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Improved economy lifts PensionDanmark inflows

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  • Improved economy lifts PensionDanmark inflows

DENMARK - Danish labour market pension fund PensionDanmark saw contribution inflows grow by 13% last year, as the knock-on effects of higher employment, higher wages and higher contribution rates fed through.

"2007 was a year of considerable growth in pension contributions, members, and members' total savings," said managing director Torben Möger Pedersen in the annual results statement.

Pension contributions totalled DKK9.4bn (€1.26bn) in 2007, up 13% from the year before. Assets under management rose to DKK70.4bn from DKK61.9bn, and the number of members increased from 517,000 to 544,000, the pension fund said.
Pension fund secretary Jens-Christian Stougaard said there were several reasons for the strong rise in contributions.

"We are still seeing an increase in pension contribution rates, and they have increased in 2007 from 2006, and secondly, contributions are calculated as a percentage of wages, and the overall wage level has increased by about 4%.

"Thirdly, we have seen an increase in employment in the areas in Denmark from which we have contributions - in construction and also services," he said.

PensionDanmark's investment return for 2007 was 2.6% before tax, compared with 7% the year before but the fund described the result as "satisfactory" in a market characterised by falling bond prices and turbulent equity and credit markets.

"The investment return was boosted by high returns on investments in private equity (19.4%) and property (11.1%) as well as a satisfactory equities return of 5.4%, which was 1.7 percentage points better than the equities benchmark," it said.

The fund pointed out the investment return was hit by big falls in index-linked bond prices, which was in turn because of changes in way pensions returns are taxed in Denmark. But the Danish parliament has pledged to compensate those pension scheme members affected, the fund said.

"PensionDanmark's members will receive compensation of just under DKK500m," it said, adding if adjusted to take account of this, the 2007 return would be 0.7 percentage points higher than reported.

Administration costs were up in absolute terms, to DKK335 per member in 2007 from DKK318 the year before, but as a proportion of contributions they remained at 2%, the fund said.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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