EUROPE – Norwegian public sector pensions provider KLP is to set aside an extra NOK10.7bn (€1.44bn) for increased longevity demands.

The country’s financial regulator Finanstilsynet has just set new mortality tables to determine pension provisioning for group pension schemes, to take effect from next year.

KLP said reserves required for its customers were NOK7bn lower than they otherwise would have been because public sector pensions had less need for increased provisions than other group pensions.

“This is due to the fact that a so-called lifespan adjustment for such pensions was made mandatory in 2009,” it said.

Because NOK4.5bn had already been financed through reserving in 2012 and before, KLP said it still had NOK6.2bn to finance, or about 3.7% of the premium reserve in the pension plans.

Finanstilsynet has said 20% of the extra reserving by pension schemes should be financed by the pension institutions themselves.

KLP said it would now consider – in conjunction with the authorities – how to make this work within the public sector pension plans.

Meanwhile, an increased appetite for risk helped Finland’s employee pension schemes return 9.8% overall in 2012, according to research from Finnish pensions alliance TELA.

This rate of investment return was significantly higher than annual average growth between 2004 and 2011 of 6.5%.

TELA analyst Maria Rissanen said total investments in the sector had increased because of favourable market developments.

“This has happened in investment portfolios because of improved market valuations, but also thanks to an increased appetite for risk,” she said.

She said the high returns were gained in a very challenging investment environment, with investors concerned about the duration of sluggish global economic growth, the US debt ceiling and the European debt crisis.

The investment assets of pension insurers rose by €13.3bn or almost 10% during 2012 to €149.6bn, the organisation said.

Among asset classes, equities produced the highest returns for the pension schemes at 12.8%.

Fixed income investments generated 8.1% and property produced returns of 5.5%.

In other news, Denmark’s Industriens Pension announced it would double investments in infrastructure and real estate over next few years.

Reporting its 2012 annual results, the labour-market fund said it made an investment return of 12.9%, up from 4.2% the year before.

Pension contributions rose 5% to DKK7.8bn (€1bn), lifted by transfers from other pension providers, while regular contributions were unchanged at DKK6.7bn, it said.

The fund said it planned to boost investment in infrastructure and property.

Managing director Laila Mortensen said: “We have invested approximately DKK5bn in property, infrastructure and PPP (public-private partnership) projects, but over the next few years we will double investments in these areas. In particular, we will invest in Danish properties.”

Separately, Danish doctors’ pension fund Lægernes Pensionskasse said it beat its benchmark quoted asset investment in 2012, but the overall result was hit by a scheme overhaul.

Listed investments returned 14% last year, 2.4 percentage points higher than the strategic benchmark.

The return on total investment assets was 12.5%, it said.

However, the return on total assets was lower than this at 8.4% because of the scheme’s mid-year shift from traditional guaranteed pensions.

Around half the scheme’s assets – DKK32bn – were converted from interest-rate hedging into general investment assets at that point, Lægernes said.

“Interest rates continued to fall during the year, but we were unable to record the same gain seen by institutions that still have many guaranteed schemes with interest rate hedging,” it said.

On top of this, the positive trend in listed investment assets was most marked at the beginning of the year, while the scheme’s assets were still tied to guarantees and could not invest freely, it said.

Lægernes Pensionskasse also announced it had now sold its entire holding in drug company Hospira after the firm failed to respond to its concerns.

At the end of 2012, the holding was valued at DKK48m, the fund said.

The pension fund said: “The decision was taken in agreement with the pension fund’s policy on socially responsible investments, since Hospira had still not responded to an approach from the fund on what action it would take to alter distribution to prevent the misuse of a medicine.”

Last week, Lægernes PK said it had contacted the medical firm about concerns that one of its products was being used by some US prisons in executions.

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