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ATP Raises Pensions Despite Losses

 

By Giovanni Legorano, Global Pensions

 

October 30, 2008 

 

Denmark

 

Danish pension fund giant ATP has confirmed its commitment to raise all current and future pensions by 2%, despite reporting a 1.4% loss on its investment return for the first nine months of 2008.

ATP estimated the payment increase at DKK5.9bn (US$1.03bn) for its more than 690,000 current and future pensioners.

The fund claimed the combined effects of diversification of investments between different assets and hedging of equity- price losses, in particular, had cushioned the investment return. 

It added price falls on domestic equities and emerging market equities mainly dented ATPs results. ATP lost 14.7% on equities, while the equity markets had plunged by 20-30% on average during the first three quarters. 

Lars Rohde, CEO, ATP, said: Q3 has been quite a challenging quarter for ATP and results in the red are obviously not satisfactory. However, I am pleased to see that our strategy of hedging against equity price falls and increasing our risk diversification actually works. 

ATP said losses were contained by generating a profit on three out of five asset classes, while financial instruments purchased to hedge the equity exposure generated a net return of DKK6.2bn (US$1.08bn). 

In addition, ATP posted a 17.9% investment return on oil investments. 

During the first nine months of the year, ATP said DKK6.2bn (US$1.08bn) in pension benefits were paid to scheme members, up DKK554m (US$96.74m) on the same period last year. 

ATP said in August it would raise all pensions and pension commitments. At the time, it revealed it had recorded a net loss of DKK7.3bn in the first half of 2008 .


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