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PensionDanmark to pay 'good' rate on accounts

DENMARK - Danish labour market fund PensionDanmark has fixed its long-term pension savings interest rate at 6% for 2007, and has provisionally allocated members the same rate for next year despite a likely fall in the fund's investment returns this year.
 
In the five years from the beginning of 2004 to the end of 2008, members of the DKK62bn (€8.31bn) fund will have seen a 31.3% return on the old-age pension savings, it said in a statement.

In those pension firms where the annual account return was 4.5%, the fund pointed out, the five-year return would have been just 24.6%.

"In the last few years, PensionDanmark has achieved a very satisfactory investment return," said administrative director Torben Möger Pedersen.

"Even though the investment return for 2007 shows signs of being somewhat smaller than last year, PensionDanmark is so well consolidated that sticking to an account return of 6% is the right thing to do," he said, adding: "In our opinion, it is best that the money is put in the members' own accounts."

The pension fund also pointed out it is able to pay a slightly higher rate because, unlike many pension firms, it does not have to pass on extra shareholder returns.
 
Möger Pedersen said many bank-owned firms calculate an extra shareholder return of up to half a percent of customers' savings. This is transferred in advance to the net capital, leaving even fewer resources to pass on to customers as account returns, he said.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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