EUROPE – Investments at Denmark’s Pædagogernes Pensionskasse (PBU) produced a return of 9% in 2012, up from 5.3% the year before, and the fund said returns over the past few years vindicated its decision to move to unit-link pensions.
Leif Brask-Rasmussen, managing director of the fund, said: “The year’s result is satisfying, and whether it is seen in the short term or over a number of years, PBU has delivered a very competitive return.”
The average annual return between 2009 and 2012 was 12.1% and 6.2% between 2003 and 2012, the fund said.
“So we can conclude that the board’s strategy behind the transition to unit-link pensions back in 2003 has been beneficial for PBU’s members,” Brask-Rasmussen said.
PBU, which runs labour-market pensions for education practitioners (pædagoger) in Denmark, also said it would halve administrative costs for members in 2013.
The board had decided to implement a new costs model applying to all members whose pension was not yet in payment.
Total assets grew 11.5% to stand at DKK44.4bn (€5.9bn) at the end of 2012.
In other news, investments at Swedish pension fund AMF returned 3.3% in the first quarter of 2013, up from 2.6% in the same period last year.
Assets under management grew by 15% to SEK426bn (€49.8bn) on the back of higher contributions and asset growth.
The solvency ratio increased slightly to 200 at the end of the first quarter from 198 at the same point in 2011.
Johan Sidenmark, AMF’s chief executive, described the return as good.
It was a sign of AMF’s strength that it had been re-selected in the ITP procurement process earlier this year both in the traditional and unit-linked pension categories, he added.
Stock markets had performed well at the start of the year, the fund said, despite uncertainty about the global economic outlook.
Peder Hasslev, vice-president and head of investment at AMF, added: “A sign of the uncertainty is the negative price development in base metals.
“With our strong financial flexibility, we continue to create a better balance between asset classes.”
Meanwhile, the Norwegian FSA is proposing to lower the ceiling on the discount rate life insurers and pension funds can use to calculate liabilities, to 2% from 2.5%.
A consultation period on the planned change will run until 21 May, and the regulator will then publish the actual interest rate to be used by 1 July.
In a statement, the regulator said: “For solvency reasons, the FSA will set the highest interest rate life insurance companies and pension funds can use to calculate premiums and technical provisions.”
The FSA said it was instructed by law to set the maximum permitted discount rate at not more than 60% of the Norwegian government bond yield.
Between January and April this year, the 10-year bond was yielding between 2.1% and 2.6%.
Lastly, Sweden’s SPP says it is investing in loans to Fairtrade farmers in Latin America, a move which it says will give it access to competitive returns.
SPP, which is owned by Norwegian corporate Storebrand, said it was investing an undisclosed amount in the Fairtrade Access Fund, which is managed by Incofin IM in collaboration with Fairtrade International and the Grameen Foundation.
Jonas Ahlen, investment manager for microfinance and social investment in SPP/Storebrand, said: “We have a huge role to play by providing loans to Fairtrade certified farmers’ cooperatives.
“This type of investment is interesting because we get exposure to a rapidly growing market with competitive returns, while contributing to a more responsible use of resources in poor countries.”
Through Fair Trade, farmers also had greater access to international markets, a minimum price for their goods and better labour conditions, Ahlen said.