According to PensionDanmark’s recently released annual report, its members received record-high returns on their savings in 2021. Bolstered by a total investment return of DKK 36.5 billion, member savings are well prepared for a 2022 that got off to a bumpy start with volatile financial markets and geopolitical tensions brought on by Russia’s unacceptable invasion of Ukraine.
Younger members received a return of 16.0%, while members approaching retirement received 10.3%. With these strong 2021 returns, returns on members’ savings remain positive relative to the beginning of 2021 in spite of the falling equity prices witnessed during the first two months of 2022. At the end of February, the return for 2022 to date was negative at 4.7% for younger members and negative at 2.5% for members approaching retirement.
”The situation in Ukraine is highly disturbing, but thanks to the record returns generated in 2021, our members do not need to be concerned about their pension savings, although 2022 got off to a bumpy start due to financial market turmoil and the massive and long-lasting geopolitical and security policy changes,” said PensionDanmark CEO Torben Möger Pedersen, and added:
”Our younger members are many years away from retirement and have plenty of time to recoup equity market losses. Our older members have lower risk profiles, and due to our equalisation mechanism the outlook for not having to reduce pension benefits is good – even if the current market turmoil prevails for a long time.”
Ahead of Russia’s invasion of Ukraine, PensionDanmark sold off all its Russian government bonds as well as all shares and loans in companies in which the Russian government has a dominant ownership share. PensionDanmark’s investment department is monitoring the situation closely and continually aligns our portfolio with changes to the risk situation.
New IT platform future-proofs low costs
In 2021, PensionDanmark’s unwavering commitment to leveraging the potential offered by new technologies meant we were able to migrate our entire insurance administration to a new cloud-based IT platform that will enable us to continually offer innovative products and services customised to the situation and needs of our individual members.
The operating efficiency of the new platform helps underpin PensionDanmark’s position as Denmark’s most cost-effective pension fund. Annual administrative expenses remained at DKK 297 per member in 2021, for the sixth year running, while investment costs were a mere 0.52% of assets.
”Ever since PensionDanmark was established 30 years ago, we have continually leveraged technological advances to provide customised and easily accessible services for our members, while at the same time freeing up time for our advisers to assist members where human contact is of the essence. Our new platform will help us do just that for many years to come,” explained Torben Möger Pedersen.
Brisk activity in healthcare programme
Another positive development in the past year was the level of activity in PensionDanmark’s healthcare programme. The number of physiotherapy and chiropractor treatments was up to some 420,000, a 14% increase relative to 2019 before the pandemic restricted access to treatment in 2020.
At the same time, the number of new Prompt Diagnosis cases was up by 22%, giving members in some 12,000 cases access to fast-track treatment in the healthcare system.
Progress on corporate social responsibility reporting
The Corporate Social Responsibility report for 2021 was PensionDanmark’s first time reporting in accordance with article 7 of the EU Disclosure Regulation. This new step means that we now disclose the climate, environmental and social impact of the companies in our equity portfolio in terms of hazardous waste volumes, gender pay gaps and exposures to controversial weapons, among other things.
In addition, we have added infrastructure and private debt investments to our carbon emission measurements, so they now encompass 60% of our total investments.
”Only by taking the lead and continually adding to our disclosures can we identify and raise awareness of the footprint left by our investments across climate, the environment, people and societies. This is instrumental in our structured efforts to make a difference,” concluded Torben Möger Pedersen.