2022 was a historic year marked by war in Europe, a new world order and elevated global economic uncertainty as several crises unfolded simultaneously. While these historic events also left their mark on Denmark’s largest labour market pension fund, PensionDanmark delivered a solid performance in 2022, as demonstrated by the annual report released today.
”After a historic year dogged by war, inflation, rising interest rates and massive uncertainty, we are pleased to report good results in 2022. The proportion of active members has grown active and we have emerged from a year of financial turbulence with limited losses,” says Torben Möger Pedersen, CEO of PensionDanmark.
The number of contributing members increased by 15,000 to 416,000, while the total number of members reached 815,000. Total contributions grew to DKK 15.2 billion from DKK 14.6 billion in 2021.
New opportunities in a new world order
While the war in Europe triggered double-digit percentage losses in equity and bond markets, PensionDanmark was able to contain losses for its members to 4-7% thanks to its successful investment strategy. Despite the setback in 2022, members have received average annual returns of 6-7% during the 2008-2022 period.
In light of the new world order, PensionDanmark will increase focus on investment opportunities contributing to accelerate the green energy transition and increase defence budgets across Europe.
PensionDanmark has offered to partner with the Danish Armed Forces on upgrading and operating military barracks. Ad in a partnership with Terma and OMT, we are currently developing five new patrol vessels for the Danish Armed Forces that are suitable for both military and environmental tasks.
30 years of PensionDanmark
The release of these reports also marks the 30th anniversary of the first contributions paid in to Danish labour market pension funds. In January 1993, PensionDanmark received total contributions of DKK 54 million. Today, we receive DKK 1,500 million every month.
Before the creation of labour market pensions, state pension and ATP benefits covered 40-55% of pre-retirement incomes. Today, thanks to labour market pensions, skilled and unskilled workers receive 60-70% of their previous incomes, and this share will grow to 70-80% by 2050 as the generations who have saved up for retirement throughout their working lives retire.
This means current and future generations of retirees are relatively better off in overall terms and that labour market pensions have contributed to narrowing retiree income gaps. At the same time, the public purse is more robust thanks to the growing level of savings.
CO2 accounts covering almost 80% of investments
Together with the annual report, we are publishing PensionDanmark’s corporate social responsibility report, which includes even more carbon emission data for Denmark’s largest labour market pension fund. In 2022, we added mortgage bonds to our carbon measurements, so our climate accounts now encompass almost 80% of our total investments, compared with just under 60% in 2021 and 50% in 2020.
In 2022, the climate footprint of listed equities and bonds was 9.8 tonnes of CO2 equivalents per million kroner invested, which means we are only 7% shy of achieving our 2025 target of 9.1 tonnes per million kroner.
The reports also make PensionDanmark the first pension fund to report on the biodiversity impact of six urban development projects. In the absence of international standards, we report according to a method developed in a partnership between PensionDanmark, SLA, Andel and Aaen Engineering. The method is based on a number of biodiversity objectives inspired by scientific recommendations and the DGNB sustainability certification requirements.
You can find a summary of the annual report here.
You can read the CSR report 2022 here
