Pensiondanmark, a non-profit labor market pension fund, produced significantly higher investment returns in 2016 compared to 2015.
The investment returns in 2016 totaled approx. DKK 13 billion (approx. USD 1.8 billion), compared to just DKK 7 billion in 2015. For the individual pension fund member, this means that those under the age of 41 received returns of 7.1 percent, while a 65-year-old receives 7.3 percent.
Pensiondanmark had returns of 6.3 percent in listed equities, which is 1.4 percentage points below the benchmark at 7.7 percent. In credit bonds and loans, the company collected returns of 10.7 percent, just below the benchmark of 10.8 percent, while the actual returns on Danish government bonds and mortgage bonds exceed the benchmark by 0.9 percentage points, at 5.3 percent.
Looking at Pensiondanmark's alternative investments, the company reached solid returns at 10.9 percent in infrastructure and renewable energy, which is slightly better than for unlisted equities, where returns came out at 10.4 percent. Returns for real estate were 9.6 percent.
"Securing our members a good return on their savings is an important duty for Pensiondanmark. The past few years, this duty has been a challenge to live up to, with the low interest rates. Pensiondanmark's response has been to increase investments in credit, private equity, infrastructure, and real estate. This creates good returns that are less dependent on global economy and stock markets," says Torben Möger Pedersen, CEO at Pensiondanmark.
Pedersen is also satisfied with the lower administrative expenses. Expenses per insured person in 2016 were at DKK 289 (approx. USD 41) compared to DKK 305 the year before.
"We have successfully reduced our administrative expenses, which were already low. This is a result of the digitalization and automation of more and more processes. At the same time we have raised our standards for members' service through new web services and very short response times in our call center," says Torben Möger Pedersen.
Finally, Pensiondanmark can celebrate the fact that the company reached its highest level of pension payments from members ever last year. It came to DKK 12.8 billion compared to DKK 12.1 billion in 2015 according to the annual accounts.
Pensiondanmark had 695,000 members in total by year-end.
English Edit: Marie Honoré