Danish labour-market pension fund PensionDanmark reported 2015 investment returns of less than half the prior year’s levels at just over 5%.

It predicted the returns it would reap over the next few years would turn out to be still lower, partly because equity markets are now overpriced. 

In its annual report, the pension fund said pre-tax profit on investment assets dropped to DKK7.1bn (€952n) in 2015 from DKK16.1bn in 2014.

The pre-tax return for scheme members aged 65 fell to 3% last year from 10.6% the year before, while that for 40-year-old members slid to 5.2% from 10.5%.

Torben Möger Pedersen, PensionDanmark’s chief executive, said: “2015 was a turbulent year, particularly on the listed markets.”

In the light of this, the pension is satisfied with the year’s investment return, he said.

In its annual report, PensionDanmark warned that, over the next few years, it expects a somewhat lower return than in 2015.

“The time of very high returns is over,” Möger Pedersen said.

He said this was partly because of the very low level of interest rates, and partly due to the fact equities went from being priced at low levels just after the financial crisis to current levels, where they are priced slightly on the expensive side.

He said there were also a lot of factors indicating that there would be greater swings in returns in the future than had been the case in recent years.

PensionDanmark’s quoted equities made a 7.7% return in 2015, outperforming the benchmark by 3.4 percentage points, according to the annual report.

Corporate and emerging market bonds, however, finished the year with a 2.4% loss, falling short of the benchmark by 0.8 percentage points.

Within unlisted assets, private equity generated 12.1% last year, while infrastructure returned 7.2% and property 8.7%.

PensionDanmark said it expanded its investments in infrastructure and real estate over the course of last year, emphasising that these assets were less sensitive to the economic cycle.

It had DKK18.8bn invested in infrastructure and DKK13.6bn in real estate at the end of 2015, amounting to 18% of its overall investment assets of DKK183bn.

The pension fund said the growth in employment in Denmark had shown through in its annual figures, with regular contributions rising 6% to DKK10.8bn in 2015, and membership numbers climbing by 20,000 to 684,000.