DENMARK - Danish insurance companies are now calling for a coordinated global stock market ‘pause' from the continuous fall in equity markets as well as a rescue package to support pension schemes worldwide.

The value of global share market has fallen so continuously in recent weeks that Topdanmark, one of Denmark's insurance-based pension providers, has claimed many pension funds have reached the pain threshold of what they can withstand in terms of losses and is subsequently arguing stock markets should collectively stop trading for two weeks in a bid to protect pension valuations from further losses.

"There is a pessimistic spiral in motion, which begets the decrease of the euro," claimed Steffen Heegaards, spokesman for Topdanmark.

"A lot of the pension funds are required to sell off their investments because of the large depreciation. It will lead to a destruction of pension values and a whole generation of pensioners, who will be much poorer. We need a globally-synchronized break of two weeks in order to re-establish the global stock markets," added Heegaards.

Pensam, which is the administrator of pensions for the public-sector employees, is backing Topdanmark's demand, alongside representatives from several other pension funds, but also believes an ‘intervention' is needed during the two-week gap.

"It is profoundly unpleasant to see the values collapse in this scale," said Claus Asker Olsen, director of the financial field in Pensam.

"We could do with a globally-coordinated stock market break. It is fundamentally important that governments and central banks take part in this, and they have shown great willingness to do so, " he claimed.

Any pause in trading - were governments, regulators and exchanges to comply, would probably lead to heightened uncertainty, Topdanmark's Heegaards recognises, but an active intervention during the stock market break might assist the ‘pause'.

"I fully agree that a pause in itself only increases uncertainty - unless it is accompanied by coordinated action from the governments," said Steffen Heegard.

None of the pension companies have so far been able to put a name to a specific rescue package which could be customised to the pension schemes, however among the proposals being tabled is a suggestion of national and international funds being established, which could buy shares to strengthen the market.

Another proposal has been to change the accounting regulations, as required solvency is less focused on market value and more on the strategic value of investments, especially as the Danish market has recently moved to mark-to-market pricing.

The main concern for many of the pension companies in Denmark is they could be forced to sell shares at the worst possible time and with great loss because of legal requirements on solvency.

The biggest concerns, it appears, are in relation to pensions annuity guarantees which come under strain because of the global financial crisis as the large depreciation of share prices then drain the funds' reserves and makes it more difficult to meet the annuity guarantees promised their customers.

"We are in a phase of panic when all consistency has ceased, "said Tim Franck, investment director at PFA.

"It cannot continue, and we must consider what we can do to stop the panic. The solution may be to close exchanges for the rest of the day. But it's not something only to be done in Denmark. It must be a globally-coordinated shutdown," he suggested.

In contrast to other pensions experts, Franck argued a global stock market break of two weeks would too long and agrees such a long break will simply move the turbulence to other investment options.

"If not all financial markets are covered, the hedge funds - and hence the unrest - will just move to the markets in which we can continue to act. There is a risk that the panic mood would simply spread to more active groups, "said Franck.

Officials at Copenhagen Stock Exchange remain critical of calls for a global stock market break, arguing it technically impossible to implement.

"I am doubtful about whether it practically possible, said Bjorn Sibbern, chief executive from OMX.

"A global stock market break will have to take into account the different time zones, marketplaces and setups within which securities are traded."

Sibbern also doubts whether a stock market break would have a positive effect.

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