Danish pension provider, ATP, has achieved record high returns of 35 per cent in relation to the bonus potential, delivering nearly DKK 50bn in investment returns in 2021.

The scheme attributed the 35 per cent return relating to bonus potential, calculated on a daily basis, to listed as well as unlisted shares, noting that investments in inflation-related instruments offset the negative returns on government and mortgage bonds.

The provider previously confirmed plans to increase pensions by 4 per cent from 1 January 2022 as a result of the strong returns, representing the largest increase ever at DKK30.4bn.

This applied to all ATP members, with the average 66-year-old pensioner stood to benefit from an additional DKK 14,300 in total.

ATP also confirmed that member costs remained "low in both a Danish and international context" at 0.54 per cent relative to assets.

However, despite the strong result in 2021, the group acknowledged that uncertainty and fluctuations are expected to continue to impact markets in 2022, predicting lower returns for the year ahead.

ATP CEO, Bo Foged, commented: “2021 was a year of records, in which ATP simply performed the best ever in several respects.

“We earned almost DKK 50bn in return on our investments, we increased the members' pensions by DKK 30.4bn, and we put into words our high climate ambitions, which will make us the largest green investor in Denmark both in the short and long term.

“I am very pleased, on behalf of our members, that in these years we have been able to surpass ourselves financially because there is in fact a direct connection between how much money ATP is able to earn on the investments and the pensions that we can pay out to our members.

“In 2021, our financial reserves became so strong that we were able to increase pensions by the largest billion ever. And despite the cut of DKK 30bn, ATP is still strongly equipped with a bonus ratio of 20.3 per cent and assets of just under DKK 950bn.

“At the same time, throughout 2021, we have delivered on many urgent tasks triggered by the Covid-19 pandemic.

Indeed, ATP highlighted key work to protect pension guarantees in particular, with the financial report revealing that, as a result of rising interest rates, the guaranteed pensions were adjusted downwards by DKK 48.6bn.

The hedging portfolio also gave a corresponding negative return of DKK47.6bn, with the result of the hedging before the so-called yield curve break amounting to DKK 1bn.

“The hedging worked as intended, and ATP’s members can confidently count on their pension guarantees in ATP regardless of pandemics, rising inflation, and higher interest rates," ATP stated.

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