2020 was characterised by uncertainty and large fluctuations in the financial markets. Nevertheless, by the gateway to 2021 members can delight in attractive returns on their pension savings in the past year.
All of PensionDanmark’s age pools had positive returns at the end of 2020. The return for members up to the age of 45 years was 7.6 per cent while the 67-year age pool grew by 3.9 per cent. The difference in return for the age pools is due to the higher investment risk for younger members. With more years to retirement age than older members, the younger members have a larger proportion of their savings in equities. And in 2020, the asset class with the highest return was equities.
”We are very pleased to have delivered attractive returns to our members despite a turbulent year on the financial markets. We have navigated well during the difficult times – especially on the stock market – to the benefit of our members,” says Torben Möger Pedersen, PensionDanmark’s CEO.
Looking at asset classes, equities in particular lifted the returns.
”The return on our equities is very attractive – especially when looking back at the precipitous decline in equity prices in the spring when COVID-19 spread to the West. Despite the good re-sult, we must expect lower returns on the financial markets in the coming years. We must therefore focus to maintain the lowest costs in the industry while securing the best possible returns" Torben Möger Pedersen points out.
The return on listed equities of 13.3 per cent is approximately 5 per percentage points higher than the return on global equity indices. This is for one thing due to an increased exposure to tech companies and companies with a strong focus on sustain-ability that have done well during the Corona crisis.
Facts: Return on PensionDanmark’s age pools (middle risk) in 2020
Age pools: (2020/3-year average)
45-year age pool: 7.6% / 6.8%
55-year age pool: 7.1% / 6.3%
60-year age pool: 5.8% / 5.5%
67-year age pool: 3.9% / 4.4%