DENMARK – The Danish labour market pension fund PensionDanmark says it returned 11% in 2004 and that its reserves are almost four times higher than required by law.
The fund, whose capital value has grown to DKK41.2bn (€5.53bn), has reached DKK 5.4bn in reserves, up from DKK3.8bn.
Its equity portfolio returned 13.3%, compared with an 11% target. Private equity yielded 15.1% while high yield bonds brought in 9.8%. Government and real estate bonds returned 8.4% and real estate 9.9%, Jens-Christian Stougaard, head of management secretariat, told IPE.
He added that the Danish financial services authority, which monitors pension funds on a daily basis to gauge how they could cope with market changes, has awarded PensionDanmark “green light” status all year.
As a consequence of the double-digit returns posted in 2004, members will be paid 4.5% after taxes as a minimum interest on half of the accrued savings, which are paid as a life-long pension and 9.2% on the other half, which is paid over a 10-year period after retirement.
Stougaard explained that PensionDanmark tended to pay stable rates on the life-long pension while interest on the 10-year pension was more volatile.
In 2004 contributions have gone up 15% to DKK6.6bn the annual report said, while the volume of pensions paid out has risen from DKK1.2bn to DKK 1.5bn. Membership has also risen, from 468,000 to 488,000.
Administration costs per member have gone down from DKK339 to DKK317. “PensionDanmark positions itself as the most cost-effective pension providers,” the fund said.