Denmark's biggest occupational pension company, Sampension, finished 2016 with returns on investments totaling 8.1 percent, equivalent to DKK 14.2 billion (EUR 1.9 billion).
That is substantially better than in 2015, when investments only returned about 1.8 percent.
"It's good for clients to see their savings growing considerably again after a slow 2015, and it's good for clients that Sampension once again manages some of the best returns among our competitors," says CEO at Sampension, Hasse Jørgensen, in a press release.
Administrative expenses decreasing
Most of Sampension's upwards of 270,000 clients have their savings in the traditional average interest rate with warranty, and here the returns were at 9.6 percent including interest rate hedging, which means that Sampension has decided to grant clients a deposit interest of 5.3 percent before taxes for 2017.
For clients with market rate products, where a little more than two thirds of premium payments of the year went in, returns landed between 4.8 and 9.7 percent depending on the client's age and choice of risk.
Administrative expenses per insured client have fallen from DKK 412 to DKK 397. Included in the expenses are also investment costs, which in Sampension's accounts are quantified as annual percentage rate, APR.
For clients with market rate, APR averages at 0.43 percent for clients with moderate risk, where expenses for young savers are higher than for the older ones. Traditional average interest rate has an APR of 0.5 percent, while the unwarranted average interest rate saver gets away with 0.36 percent.
Premium growth from new agreements
Payments rose again in 2016 and resulted in a premium growth of 4.9 percent to DKK 9017 million. The growth was, however, not quite as big as in 2015, where premiums grew by 10.8 percent.
"The growth in 2015 was mainly the result of renewal of collective agreements, where the parties on the market chose to strengthen the pension area. Contributions in 2016 where as high in 2016 as in 2015, which was very positive considering that contributions in 2015 benefited from IT company KMD signed for a new pension scheme with Sampension," Sampension writes in the press release.
Regarding company pensions, Sampension landed two new deals in 2016. In April, IT company Tech Mahindra with 60 employees chose to enter an agreement with Sampension, while September brought on 800 new clients via Sportmaster. Both agreements include a health care plan.
Over the course of 2016, Sampension has worked to include The Architects' Pension Fund and The Pension Fund for Agricultural Academics and Veterinary Surgeons in Sampension Administrationsselskab. From January 1 2017, just under 20,000 members will be included with total assets of DKK 22 billion.
"The collaboration means that the two pension funds can reduce their administrative expenses by almost 50 percent per member," says Jorgensen.
From 2017, Sampension expects a "moderate" growth in premium payments, as, like in 2016, there are no agreements to negotiate during the course of the year.
"The total insurance related administrative expenses are expected to stay at the same level nominally as in 2016, while investment costs in APR are expected to be reduced in the coming years," Sampension writes in the accounts.
English Edit: Marie Honoré