Denmark’s largest commercial pension provider PFA Pension reported a fall in investment returns for 2015, with the return on market-rate pensions coming in at 6.7% compared with 10% the year before but described them as “solid” given the financial market environment.

In its 2015 annual report, PFA Pension reported that returns on its various market-rate pension profiles were between 5.3% and 12.3%, down from 9% to 12.8% in 2014.

For its traditional with-profits pensions, the return adjusted by market value was 3.6% compared with the previous year’s 6.3%.

Allan Polack, group chief executive at PFA, said: “In spite of the heavy fluctuations on the financial markets, we generated solid returns for our customers – even compared with the best on the market.”

The company also managed to attract new corporate customers and raise pension payments, which will benefit all customers by way of economies of scale and reduced unit costs, he said.

Total contributions climbed to DKK28.3bn (€3.8bn) in 2015 from DKK24.9bn, and costs per member fell over the year to DKK757 from DKK783.

“The strong result was achieved through PFA’s focus on more steady assets and tight risk management,” Polack said.

Shares, unlisted investments and property produced the higher returns.

In its annual report, PFA said stock picking had been one of the factors driving the equities return, with its PFA Global Equities portfolio, for example, generating a return 6.8 percentage points higher than the general global equity market last year.

Danish equities produced a 34% return last year on PFA’s overweight position in the asset sub-class. 

It said that, after the first half of 2015, it reduced its holding of Danish shares because of the very high concentration risk that had built up as prices had risen, but it added that it still held a significant amount of these assets.

Private equity investments returned 18.9% in 2015, and real estate produced a 12.6% return.

Mortgage bonds, on the other hand, made a 1.7% loss at the end of a “difficult year for Danish bonds”.

PFA Pension’s total assets grew to DKK437bn at the end of 2015, from DKK407bn at the close of 2014.

Solvency coverage increased to 290% from 176%.

On the business side, PFA Pension reported that pre-tax profit fell to DKK128m from DKK1bn the year before, and after tax, the company made a DKK587m loss for last year, down from a profit in 2014 of DKK431m.

The after-tax result was hit by an extraordinary write-down of deferred tax assets of DKK624m, it said.

Net profit was lower than expected for this and two other reasons, PFA said.

It said it had been unable to recognise the full risk premium, and that its health and accident insurance activities had made a loss of DKK655m.