DENMARK - Contributions at Danish commercial provider AP Pension soared by 39% in the first half of this year, while its investment return outstripped those seen at all major rivals, according to AP Pension.

In its interim report for January to June 2010, AP Pension announced a return on investments of 10.3%, up from 2.3% for the same period last year. Gross contributions rose to DKK2.8bn (€375m) from 2.0bn.

The bulk of this rise came from one-off contributions, the provider explained, which had doubled to DKK1.4bn from DKK700mn. Regular contributions rose at the more modest rate of 7.5%.

Søren Dal Thomsen, director at AP Pension said: “The doubling of one-off contributions shows that many new customers chose to transfer their contributions to AP Pension, but were holding back from transferring their savings because of the kursværn [price protection measure] that had been introduced.”

During times of market instability, some Danish pension funds impose a  kursværn, or price protection measure. This obliges customers to pay an extra charge for withdrawing or transferring their savings.

Dal Thomsen said it was now clear that these price protection measures had been removed.

Reporting its results, AP Pension said that at 10.3%, its pre-tax financial or investment return was higher than those of its rivals - Denmark’s other major commercial pension providers Danica, Nordea Liv, SEB, Topdanmark Liv 1 and PFA.

Within investments, equities returned just under 8% in the reporting period, AP Pension said. Alternative investments and hedging against interest rate falls were the main upward force behind the overall investment return, it said.

Commenting on the high return on alternative investments, Dal Thomsen said: “It is only a few years since we started investing in forestry, loans to businesses and private equity, which consists primarily of unquoted shares in Asia and Africa. So we are really pleased these investments are going well.”

Reserves had risen to 8.3% from 5.0% and administrative costs had fallen to 2.3% from 3.1%, AP Pension said.

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