Denmark’s largest commercial pensions provider PFA has reported a big swing back to investment profit but complained that other providers were stifling competition by denying customers their full allowances on transferring out of pension products.
The return for with-profits pension products bounced back to 11.3% for the first nine months of the year, after a 2% loss in the same period a year earlier, while unit-link pensions returned 8.1%, up from 5.2%.
In absolute terms, the PFA group made an investment return of DKK34.7bn (€4.7bn) between January and September, up from a loss of DKK3bn reported for the same period last year.
Regular contributions climbed to DKK12.5bn between January and September, up from DKK11.9bn in the same period last year.
However, one-off payments and transfers dwindled to DKK5.6bn from DKK7.5bn.
PFA blamed this drop on a lack of mobility in the Danish pensions market.
This was because a number of pension providers were still failing to offer their customers the transfer allowance when they moved from a with-profits pension to a unit-link product, it said.
By contrast, PFA has given this to its customers month by month since 2009, it said.
Henrik Heideby, chief executive and head of the PFA group, said: “It is unfortunate the pensions market is stalling and competition is being threatened.”
He added that it was very important to “re-create efficiency” in the market.
“At the same time, the pensions sector must work constructively towards a solution because it has agreed with the government that pension companies should encourage more customers to move to a unit-link product,” Heideby said.
Reporting interim figures, PFA said solvency coverage rose to 265% at the end of September from 227% a year before.
Total assets increased to DKK420bn at the end of September from DKK417bn at the end of 2013.
As a mutual company, PFA’s customers get a share of the profit in the form of KundeKapital (customer capital), in addition to investment returns on their pension products.
The KundeKapital percentage increased to 13% in the first nine months of the year from 9.9% in the same period last year.
After tax and minority interests, the PFA group posted a profit of DKK797m for the period, up from DKK76bn in the same period last year.