DENMARK - Special Pensions Savings scheme, managed by ATP, has recorded a DKK 1.857bn (e134m) loss and the market return on investment for Q2 of 2004 was a mere DKK 98m (e13m), equivalent to 0.2%.
The SP scheme was set up in 1999 and requires all employees, the self-employed and some people receiving transfer payments to pay contributions set at 1% of their income.
The boost in return that followed price increases in the European and US equity markets was offset by interest rate hikes which saw prices fall in bond markets, the fund’s quarterly report stated.
ATP head of investments, Helle Holme Madsen, said while the company recorded a negative result on the bond side, it recorded a positive result on Danish equities.
The net loss could be attributed to special accounting rules that came under the Danish government’s spring package introduced in May, she added.
“We paid contributions of DKK 2.9bn (e269m) and this is included in the result,” she said.
The interest rate declines, which generated a high return in the bond markets in the first quarter, were replaced by interest rate increases in the second quarter.
The bond portfolio produced a loss of DKK 324m (e43m), or negative 1.8% for the second quarter while the portfolio of listed equities brought a return of DKK 396m (e53m), equivalent to 2.2%.
SP achieved overall results of DKK 1.162bn (134m) for the first half of 2004, with the total market return on investments sitting at 1.606bn (e134.5m) (before tax), corresponding to 3.7%.
The expected market return for SP on investments in 2004 is 6.2%, calculated by ATP based on the assumptions that interest rates remain unchanged and that the normal return on equities is approximately two percentage points above the yield on a 10-year government bond.
Standard Life has increased exposure to risk assets in three out of five funds in its Active Plus and Passive Plus workplace pension ranges.
Some 48% of employers are unaware of the services or help they offer to members of their defined contribution (DC) schemes, according to Aon.
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