Denmark’s P+ has become the latest of the Nordic country’s pension funds to shift the basis of its pensions towards market-rate, moving away from the traditional average-rate pension products – some of which carry return guarantees.

The pension fund – formed last year from the merger of the pension fund for lawyers and economists JØP and engineers’ pension fund DIP – said scheme members voted at last week’s annual general meeting in favour of the proposal for the new market-rate product to apply to new members.

Until now, all P+ members have average-rate pensions, some with return guarantee and others without.

Existing members have the option of switching to the new product, which P+ said gives savers a wider choice of investment profile.

Reporting on the outcome of the AGM, which was P+’s first in its merged form, the pension fund said: “With this, the first step has been taken towards members having more freedom of choice on the investment side.”

New investment options are expected to be ready for launch in 2021, it said.

The DKK135bn (€18.1bn) pension fund said the AGM took place online, with more than 400 of its 100,000 members logging on to the event and over 1,600 proxies having been submitted.

The proposal on the switch to market-rate pensions for new members was framed as an amendment to the fund’s “P+ Ordinance 2019” (P+ Regulativ 2019), in preparation for the introduction of investment pools.

Yesterday, the Danish FSA set out its key priorities in supervision of market-rate pensions, which are unit-linked products the regulator said now account for about two thirds of pension contributions in the country.

Average-rate pension products – which smooth returns to customers between strong and weak years on financial markets – have fallen out of favour over the last decade largely because low interest rates and increased life expectancy have put the more traditional life insurance products with guarantees under pressure.

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