ATP achieves second best year in 2020
ATP Group, which manages DKK 960bn (€129bn) of pension assets, recorded investment return of 23.3% in 2020, accounting for DKK 29.9bn (€4bn), calculated before expenses and tax. Government and mortgage bonds contributed the highest positive returns of DKK 15bn (€2.02bn), while foreign and Danish listed equities returned DKK 11.9bn (€1.60bn). Private equity generated positive returns, but infrastructure saw negative returns of DKK 1.7bn (€230m). Bo Foged, CEO, ATP, said that these results, second best after 2019’s record returns, were welcome, especially since 2020 was “an extreme year”. “ATP managed to steer through the crisis to generate a very strong investment result at the same time as delivering on a long line of urgent tasks triggered by Covid-19, in addition to which we have ensured safe and stable administration business operations,” added Foged.
During the uncertainty brought by Covid-19 induced market volatility, ATP protected its members’ pension guarantees by hedging the interest rate risk. ATP’s hedging result before the yield curve break was DKK -0.5bn, ensuring pension guarantees to its members throughout the Covid-19 crisis. Hedging created returns of DKK 66.5bn and after taxes, the pension liability was adjusted to DKK 56.8bn. overall, this resulted in DKK -7bn, corresponding to -0.9% of the guaranteed pensions. This is a consequence of the Danish pension provider determining the interest on the discount curve after year 40 at 3% and it would not affect its aggregate assets. Additionally, low expenses helped boost returns in 2020. Despite these positive returns, ATP expects to realise lower investment returns in the coming years, with uncertainty and fluctuations expected to continue to dominate the markets in 2021.
The Danish pension fund contributed DKK 14.6bn in tax on pension savings returns and corporate income tax, while over the past five year, it has contributed DKK 51bn to the Danish state finances. On 10 February, ATP’s board of representatives reappointed Torben Andersen as its chair for a new three-year term.