Denmark’s AcademikerPension said it is satisfied with the mid-market return of 11.2% for its new key pension product, but said it is tweaking risk levels in AlfaPension’s different profiles as well as overhauling the equity investment strategy behind it.
The DKK145bn (€19.4bn) labour-market pension fund, which provides pensions for academics, said that with 2024 having been the first full year for the new, more flexible market-rate product – which allows scheme members to adjust their risk profile — it has learned a lot, and will now build on that knowledge.
Chief investment officer Anders Schelde said: “There were positive returns on all risk and age profiles, and the result was generally better than on our ‘old’ products.”
AlfaPension was rolled out starting in 2022 for new members.
The pension fund, based in the north Copenhagen suburb of Gentofte, said that for members with its old market-rate product, which has the same profile for all savers, and for those on the average-rate product, the 2024 return came in at 8.3%.
“It’s not that we’re putting less effort into these old products, but they just have a different strategic risk level, and it’s the risk level that raises the return – not just this year, but also in the long term,” said Schelde, in a statement published today.
Global stocks and US tech shares in particular had done the heavy lifting last year, producing double-digit returns, he said, adding that bonds and unlisted investments had also generated positive returns in 2024.
“On the other hand, after many good years, there was a disappointing return in the Danish stock market,” he added.
Compared to pension products with comparable risk levels offered by other Danish providers, AkademikerPension said its 2024 return ranked in the middle.
According to a ranking compiled recently by independent consultant Nikolaj Holdt Mikkelsen, the 11.2% return cited by AkademikerPension for younger members with a medium-risk profile compares to an average for the sector of 12.9%.
Schelde said: “The strategy the companies are pursuing in relation to listed stocks versus unlisted investments, as well as differences in the equity strategies themselves, is what has really divided the pensions market in 2024.”
“You can always do better, but we’re also satisfied right now with being firmly positioned in the middle of the market,” he said, adding that the providers who did better last year seemed to be pursuing strategies with greater short-term fluctuations.
However, he said there were several adjustments on the way from AkademikerPension for its AlfaPension product, including lowering the risk for the low-risk profile and increasing it for the high-risk profile – while the risk level would remain as it is currently for the medium-risk profile.
Schelde also said work was being done on a major adjustment of the equity strategy, in pursuit of a higher return for members.
“We are in the middle of the process, and will of course tell you much more about it when the final strategy is ready,” he noted.
“Shares are the largest, and at the same time the riskiest, asset class in AlfaPension, so we’re very focused on having a robust and updated investment strategy,” said Schelde.
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