Four of the labour-market pension funds run by Danish pensions administration group PKA are to merge with another fund within PKA with the aim of becoming more robust in the face of economic and risk-related volatility.
Peter Damgaard Jensen, managing director at PKA, which manages around DKK195bn (€26.1bn), said: “The whole aim of the mergers has been to create more robust and stronger pension funds that can meet the many challenges that lie in the future.”
The State Registered Nurses’ Pension Fund (Pensionskassen for Sygeplejersker) and the Medical Secretaries’ Pension Fund (Pensionskassen for Lægesekretærer) are merging to form the Pension Fund for Nurses and Medical Secretaries (Pensionskassen for Sygeplejersker og Lægesekretærer).
Meanwhile, the Social Workers and Social Education Practitioners’ Pension Fund (Pensionskassen for Socialrådgivere og Socialpædagoger) is joining forces with the Office Staff Pension Fund (Pensionskassen for Kontorpersonale) to become the Pension Fund for Social Workers, Social Education Practitioners and Office Staff (Pensionskassen for Socialrådgivere, Socialpædagoger og kontorpersonale).
Damgaard Jensen said the challenges the funds would face in future included not only increasing administrative demands but also the demands created by the low level of interest rates, high levels of market volatility and changing age compositions.
“The bigger the pension fund, the more robust it is in the face of the economic and risk-related volatility we experience from time to time,” he said.
Bent Hansen, the new chairman of the Pension Fund for Nurses and Medical Secretaries, said the decision reached by the boards and members of the pension funds was far-sighted.
“And the starting point has been good because both pension funds are strong economically, their pension terms and statutes are broadly similar, and they know each other well from the PKA cooperation,” he said.
Jens Stenbæk, the new chairman for the Pension Fund for Social Workers, Social Education Practitioners and Office Staff, said it had been possible to complete the merger by consensus, with all parties having been informed and given the chance to discuss implications.
“We have met no objections,” he said.
The new Pension Fund for Nurses and Medical Secretaries will have around DKK102bn in total assets and 109,000 members, while the newly formed Pension Fund for Social Workers, Social Education Practitioners and Office Staff will have DKK51bn and 95,000 members.
PKA stressed that the mergers would not worsen individual members’ pension terms, or reduce their pension size or other rights they had in any way.
The mergers are subject to final approval from the Danish FSA and expected to be completed by September or October, PKA said.
Following the mergers, PKA will administer just three pension funds, including the two new funds and the Healthcare Professionals’ Pension Fund (Pensionskassen for Sundhedsfaglige), which has DKK46bn in assets and 48,000 members.
Until 2011, PKA managed eight pension funds.
In that year, four of the smaller pension funds merged to become the Healthcare Professionals’ Pension Fund.