Denmark’s ATP, whose bond-heavy approach has frequently been criticised, is launching an external evaluation process which it likens to the independent assessments made of other large funds such as Norway’s sovereign wealth fund.
The Hillerød-headquartered institution announced on Friday that an “independent group of financial professionals from Denmark and abroad” was being appointed to conduct an evaluation of ATP’s investment strategy, chaired by Jesper Berg, the former director general of the Danish Financial Supervisory Authority.
ATP said the evaluation group would also consist of between two and three “primarily foreign experts”, adding that work to locate them was already underway.
The ATP board had approved the idea of launching the external evaluation process, based on a presentation by the pension fund’s management, the institution said, adding that the panel’s work was expected to be ready by mid-2026.
Martin Præstegaard, chief executive officer of the DKK725.2bn (€97.2bn) statutory pension fund, said: “As a natural follow-up to ATP having now made all the big decisions implementing the adjustments parliament decided on, we are carrying out what can be called a service inspection.”
He added: “It’s common sense, and we see it as good governance, because we and all Danes saving with ATP share the same interest – namely that we create the best pensions over the long term and far into the future.”
Changes to ATP’s business model were approved by parliament in 2021 – a reform which primarily involved adding more market exposure to what remains mostly a guarantee-based product – but they did not satisfy critics calling for the mandatory scheme to, inter alia, invest more heavily in equities for younger savers.
Jesper Rangvid, professor of finance at Copenhagen Business School (CBS), told IPE he was happy with ATP’s new initiative, but also thought the specific design of the investigation could be better.
“Henrik Ramlau-Hansen [associate professor at CBS] and I have said for a long time there should be an independent review of the investment strategy and investment performance of ATP, and to that extent, it is positive that one will be conducted.
“That said, I’m certainly of the opinion it would have been considerably better if it had been a review conducted by a fully independent, arms-length experts - meaning that most likely it should have been on the initiative of the government or the ministry, for example.”
“If that had been the case, the mandate that a commission would operate under would not have been written by ATP,” said Rangvid, who is also co-director of the Pension Research Centre (PeRCent), a joint initiative between BBS and the Danish pension sector.
“It’s positive there will be this review, but it could have been even better”
Jesper Rangvid, professor of finance at Copenhagen Business School
Rangvid took issue with the mandate for the committee, which says the evaluation must be based on the existing conditions regarding the design of the pension product, such as the guarantee element and the length of the interest guarantees provided.
“In my opinion it’s also very important that we also consider whether ATP overall has the right strategy — with that 60-20-20% guarantee, for example,” he said.
“The mandate explicitly says there shall be no evaluation of the model as it stands. And that’s of course a problem, because the hedging and so on would not have happened if the investment strategy had been different — it’s also a consequence of that,” the academic said.
However, Rangvid said there was nevertheless still some scope for ATP’s approach to be critically evaluated by the planned commission.
“It’s positive there will be this review, but it could have been even better,” he said.
Since ATP has already specified that the commission will consist of primarily foreign experts to work alongside Berg, it seems unlikely that Rangvid or his CBS colleague Ramlau-Hansen will be appointed.
Rangvid told IPE he agreed and was quite happy about that.
“It shouldn’t be me – I completely agree. I have been criticising ATP for five years, and it would be very strange if they asked me to be part of this.
“My wish is just that sometime this will be looked into independently,” he said.
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