Danish right-leaning free-market think tank CEPOS has come out with a new reform plan for ATP with seven specific measures, including the proposal that the statutory pensions giant should quit the business of investment management and put the running of its entire portfolio out to tender.
CEPOS said in a statement on Friday that the original idea for the now DKK693bn (€92.9bn) ATP, 60 years ago, of providing a supplement to the national pension was no longer relevant for the vast majority of Danes.
The think tank said it was therefore proposing “seven simple steps” to modernise the scheme, including the idea that citizens should have the freedom to move their savings to another pension fund, and that the mandatory payments should no longer apply to the under 30s.
Otto Brøns-Petersen, head of analysis at CEPOS, said: “Time has run out from several of the original considerations, and the model has some extensive flaws. Therefore, the scheme should be fundamentally reformed.”
Most people in Denmark saved in parallel via labour-market pensions or private schemes, he said, and for them there was no reason to have an ATP savings plan on the side.
The ATP scheme meant those people were charged with a number of extra administrative costs and prevented from exercising their individual wishes, such as choosing the level of risk they wanted or what they would like to invest in, he said.
CEPOS said: “ATP is a relic of the past and does not suit today’s pension system”.
Brøns-Petersen said young people who had only just established themselves in the labour market often did not have the same need to save as other cohorts, because they also needed to borrow to start a family and buy a home.
Among CEPOS’ seven-point wish list for the reform of ATP is a call for the mandatory minimum savings level to correspond to the current ATP contribution for full-time employees, and for the minimum savings requirement only to apply to the over 30s.
It also said that all ATP customers should be given the right to move their existing ATP savings to a pension fund of their choice, free of charge.
In its final point, the think tank said: “ATP must not manage the pension assets themselves, but send the management out to open tender”.
The proposals come amid an ongoing debate in Denmark about the suitability and relevance of ATP’s current business model, which the pension fund’s management has largely defended.
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