PensionDanmark returned just over 7%, or nearly DKK13bn (€1.7bn), in 2016, due to strong performance from its real estate, private equity and infrastructure investments.
The return is nearly double the DKK7.1bn the fund added in 2015.
Torben Möger Pedersen, CEO at the DKK221.5bn labour market pension fund, said PensionDanmark had stepped up investments in corporate bonds, private equity, infrastructure, and real estate as a response to the challenge of generating solid returns in a low interest rate environment.
“Thanks to this strategy, our members receive solid, stable returns that rely less on developments in the world economy and equity markets,” he said.
In 2016 the fund’s real estate investments generated a 9.6% return, while private equity gained 10.4% and infrastructure gained 10.9%.
The number of members covered by employer-paid pension schemes at the Danish pension fund is back to the pre-crisis level of nearly 10 years ago, it said.
It attributed this to economic growth in Denmark, which boosted staff numbers at the companies whose employees have schemes with PensionDanmark.
The pension provider had 695,000 members at the end of the year, up from 684,000 in 2015. Contributions reached an all-time high of DKK12.8bn in 2016, while its overall assets were up 11%.
The pension provider highlighted that 22,000 members have more than DKK1m in their accounts, compared with 700 five years ago.
It said it has reduced its “already low” administrative expenses thanks to digitalisation and automating an increasing number of processes.
The administration fee was down to DKK289 per member in 2016, from DKK305 the year before.
PensionDanmark is one of four Danish labour market pension funds that recently announced they are backing a state-backed farming fund.