Denmark’s financial watchdog has reprimanded two health-sector pension funds run by the €53.7bn pensions administration company PKA and handed out official orders for them to improve and clarify their member communication – particularly about the composition of pension benefits and the associated risks.

The two pension funds are the State Registered Nurses’ and Medical Secretaries’ Pension Fund (Pensionskassen for Sygeplejersker og Lægesekretærer) and the Pharmaconomists’ Pension Fund (Pensionskassen for Farmakonomer), which had total assets of DKK196bn (€26.3bn) and DKK13bn respectively at the end of 2022.

The Financial Supervisory Authority (FSA, Finanstilsynet) said: “The Danish FSA assesses that the two pension funds’ member communication is insufficient, as the pension funds do not fully inform the members about the various elements of the pension benefit, their importance and the risks associated with the pension benefit.”

The Copenhagen-based supervisor said it was emphasising that members had to have clear information about each individual component of their pension benefit, including the size of those elements and the risks associated with them.

“In addition, the prerequisites for different service types must be clearly stated,” it said.

“The pension funds are required to correct these deficiencies and ensure that the members receive complete, comprehensible and comprehensive information about their pension scheme,” the FSA said, adding that individuals also had to be informed about how different assumptions affected the expected performance of their pension plan.

In both reports from the FSA, the watchdog focuses particularly on the conditional nature of guarantees which scheme members were switched to when they opted to change product back in 2006 – giving up harder yield guarantees for the prospect of higher returns.

The pension funds have been given three months from 21 December 2023 to confirm that the conditions have been put in order.

IPE has asked PKA for comment.

Last summer, the FSA warned that savers could lose confidence in pension providers because of the increasing number of unguaranteed products that were available, combined with 2022’s plunging financial markets.

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