AP Pension in Denmark announced it is appealing a High Court judgement made against it earlier this month, asserting that the decision threatens the entire pension sector’s legal position.
The commercial mutual provider of labour-market pensions said: “AP Pension is appealing the Eastern High Court’s judgment in the so-called FSP case, because the company wants the case tried at the Supreme Court.”
In early July, AP Pension lost this key legal case, with the court ruling that plaintiffs had to bear unreasonable risks after their pension savings were switched to a market-rate product from a guaranteed one.
In a press release dated 19 July, AP Pension described the case as “complex and principled”, and concerning the choice by a group of customers back in 2011 – members of the former Finanssektorens Pensionskasse (FSP) – to change to a market-rate product from guaranteed with-profits plans.
FSP Pension – the bank sector pension fund – merged with AP Pension 10 years ago.
AP Pension said its chief executive officer believed that in its judgement, the High Court had disqualified and disregarded the Danish FSA’s assessment of the literature around the product-switching exercise, and that the the case had been judged based on knowledge of longevity and interest rates that were not present at the time.
Bo Normann Rasmussen, CEO of AP Pension, said: “At the time, the FSA focused, like the industry, on the investment risk and how it was explained and made clear to customers.”
But longevity risk, on the other hand, was not an issue in connection with the inspection, and it was not mentioned at all by the supervisory authority in connection with their thorough review of the product election (omvalg) material, he said.
“That’s why I wonder how, more than 10 years later, the High Court can come to the conclusion that AP Pension must compensate some customers for a risk whose extent was not known at the time,” he said.
As a pension company, Normann Rasmussen said, AP Pension expected the FSA’s assessments to be correct. He added: “If it turns out that the courts can change these assessments at any time, in the clear light of hindsight, then it is not just that of AP Pension, but the legal position of the entire pension industry that is threatened.”