Danish pension investments have “recovered well” from the downturn in 2022, figures from Forsikring & Pension (F&P) have shown.

Across the spectrum, the Danish pensions industry’s investments are now yielding positive returns after a year of losses of up to 10 per cent.

The return on equities in the first quarter of 2023 was 7.4 per cent for average interest products and 5.8 per cent for market interest products, while fixed income investments also saw positive returns of between 1.2 per cent and 2 per cent.

“We can see from the latest statistics on returns on pension savings that shares and bonds once again give nice, positive returns,” commented F&P deputy director, Tom Vile Jensen. “It is also the investments that make up the largest part of the savings.

“In the first quarter of the year, it is only investments in unlisted investments, such as, among other things, properties and infrastructure, which give negative returns.

“The only group of unlisted investments that comes out with black figures is private equity.”

F&P noted that this was the opposite of last year, when unlisted assets generally provided the best returns during a difficult period.

Data from Danmarks Nationalbank highlighted a similar picture, with the bank estimating that pension investments returned DKK 92bn in the first five months of 2023.

Over a five-year period (2018-2022) pension investment returns totalled DKK 428bn, according to the bank.

"We should be happy that pension savings are once again producing positive returns, said Velliv consulting expert, Jens Christian Nielsen.

“Just under DKK 100bn has accrued to pension savers. We have far from made up for what was lost from 2022, when the loss amounted to just under DKK 700bn in an annus horribilis.

“My best guess is that we have to go 3-5 years before we have made up for lost time - this is not unusual after major downturns in the financial markets."

The Council for Return Expectations has written up expectations for future returns from 25 per cent over the next five years to 30 per cent.

"However, in the very short term, we believe that we are facing a correction on the stock markets here in the second half of 2023,” Nielsen added.

“The prices of shares have become too high when we look at the economy as a whole.

“However, we should be happy that the bonds and interest are now again contributing positively to pension savings."

Share Story: