Danish pension fund Velliv — formerly Nordea Liv & Pension Denmark — says it is cracking down on aggressive tax planning among its asset managers in listed and unlisted investments.
The move follows action by four of Denmark’s largest pension funds to lay down a set of common principles on responsible tax behaviour in August.
Thomas Kjærgaard, Velliv’s head of investment governance, said: “We want to ensure that our partners pay a fair tax and avoid using aggressive tax planning.”
The DKK255bn (€34.1bn) pension provider said it is introducing new tax practices for its investments, under which it will actively work to avoid aggressive tax planning among the company’s managers for unlisted investments in future, increase efforts in relation to listed investments and enter into cooperation with other investors to promote responsible tax practices.
In practice, Velliv said this meant it would run more checks on its unlisted investments and participate in schemes such as the United Nations’ (UN) Principles for Responsible Investment (PRI), which works to promote fair taxation.
“We are in dialogue with the initiators of the Danish Tax Code (ATP, PFA, Pension Denmark and Industriens Pension), which we fully support. It is a strong initiative for the unlisted investments, and we would also like to help focus on the listed investments – and the international aspect,” said Kjærgaard.
The four Danish pension funds he mentioned formed the agreement on tax practices by external managers this summer, after ATP, PFA and PKA moved to distance themselves in 2018 from Australia’s Macquarie when the bank was named as part of an international tax scandal last year.
The funds agreed on principles to stamp out aggressive tax planning, such as a call for transparency in the field of tax and for external managers to adopt their own tax policy.
Earlier this year, Danish labour market pension fund PenSam also added tax as a special area in its responsible investment policy following a number of high-profile scandals.
The fund said it would investigate any companies it invested in if they paid less than 10% tax on their total earnings, or if a firm had placed all its profits in a country with a low tax rate, for example, adding it would extend this to include companies that issue equities and corporate bonds.