The Danish labour market pension provider P+ has extended its use of an emergency withdrawal-penalty measure to the extent that most of its scheme members now face extra charges to withdraw or transfer savings – after plummeting asset values.
Søren Kolbye Sørensen, chief executive officer of P+, said: “The world is in a turbulent situation right now with strong fluctuations in the financial markets.
“This may mean that the market value of the invested assets for a period is lower than the value of the members’ total pension deposits,” he said.
In such a situation, the CEO said, the pension fund could introduce a withdrawal penalty to ensure scheme members received the correct value of their savings if they chose to leave the pension fund.
“In this way, the pension fund’s other members are not affected financially if some members choose to leave the pension fund before the financial markets have made up for the loss,” said Kolbye Sørensen.
P+, which describes itself as the pension fund for academics, announced on Friday that it was introducing “price protection” (kursværn) – a withdrawal penalty – for a number of its average-rate guaranteed pension schemes with effect from 1 October.
This follows the imposition of withdrawal penalties by the pension fund for other customers in June.
That measure affected a single group of around 10,000 savers, and the measures announced on 30 September encompass a further 70,000 of P+’s 105,000 members.
According to the terms of the price protection measure, P+ members affected would have to pay between 0.6% and 9.6% of their savings in order to withdraw or transfer their pension while the measure remains in place, a spokeswoman for the pension fund told IPE.
No date has yet been set for the measure to end.
P+ is one of only two Danish pension providers to have withdrawal penalties in effect currently, the other being Norli Pension, according to data from industry association Insurance & Pension Denmark.
Withdrawal penalties are only relevant for average-rate pension products with a guaranteed return – a product type with constitutes the majority of P+’s pension provision.
The pension fund’s new customers are now offered the firm’s market-rate product, P+ Livscyklus (life-cycle), but the long-heralded process of giving other customers the choice of switching to the new product has recently hit an obstacle in the form of a delay at P+’s IT provider.
P+ announced a fortnight ago that the launch of the pension-switching process scheduled for late summer 2022 would now not take place until 2023.
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