PensionDanmark has warned pension members the returns are unlikely to look favourable this year as it predicts 2008 investment returns will be heavily influenced by the credit crisis, world economic recession and a rapidly falling equity market.

The DKK70.76bn (€9.48bn) pension fund stated in its latest newsletter it generated a negative return on its investments in the first quarter of 5.2% after tax and -6.9% for the first half, as stated last month.

Officials are, unsurprisingly, predicting, 2008 is not going to be one of the best years for its investments as equities equate to approximately a third of members' investments in PensionDanmark.

Claus Stampe, director of investments at PensionDanmark, suggested activity had pulled back slightly in August to reduce the negative return to -3.3% after tax.
At the same time, he argued while this short-term focus might look unappealing to members, the long-term perspective still shows good returns over what is usually the normal life of a pension.

"If we look at the return over time we will see a much more positive picture," said Stampe.

"By looking back to 1993 until now we will find that we have had a yearly return of 7.4% after tax. That means that DKK100 deposit into your account in 1993 was worth DKK 293 in 2007, which places us as third best in the market," said Stampe.

Further details of the update revealed from January 2009 all members will receive the current market interest return on their investments on a monthly basis, instead of once a year as they have received until now.

This rule already applied to half of the members' pension plan but from January it will applyto the entire pension plan.

As a result, it will mean members will receive their returns each month but nothing will be set aside for reserves, said managing director Torben Móger Pedersen.