The Danish FSA, or Finanstilsynet, said it found that the three labour-market pension funds run by pensions administrator PKA have overvalued some real estate assets and ordered them to re-state them in the accounts at market value.
In its inspection of the pension fund for state-registered nurses and medical secretaries (Pensionskassen for Sygeplejersker og Lægesekretærer), the FSA said it looked at 24 of the pension fund’s 207 properties, which were valued at DKK8.6bn (€1.1bn) at the end of 2014.
It said the pension fund gave 11 of these too high a value in the accounts, which failed to correspond to their market value.
The scheme valued the properties too highly mainly as a result of the yield requirement applied, it said.
The total overvaluation of the 11 properties was around DKK85.5m, the FSA said, corresponding to 26.1%.
According to Danish financial regulations, lateral pension funds and insurance companies are obliged, after the first entry of investment properties in their accounts, to book the assets according to fair value.
Similarly, in its inspection of the pension fund for health care professionals (Pensionskassen for Sundhedsfaglige), an investigation of 14 of the pension fund’s 128 properties, valued at a total of DKK3bn, revealed that five had been overvalued.
Here, the overvaluation amounted to around DKK9.4m, or 15.7%.
Meanwhile, the FSA told the pension fund for social workers, social educators and office staff (Pensionskassen for Socialrådgivere, Socialpædagoger og Kontorpersonale) that 10 of the 22 properties singled out in the inspection had been overvalued by about DKK28.4m, or 14.4%.
The pension fund had 149 properties in total, with a value of DKK3.3bn.
The regulator ordered all three pension funds to re-state the properties concerned at market value in their accounts.
In a statement, PKA acknowledged the FSA’s orders but said the total writedown required by the regulator amounted to less than 1% of the value of the properties about which it had supplied information.