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ATP Raises Pensions Despite Losses


By Giovanni Legorano, Global Pensions


October 30, 2008 




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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