Denmark’s AP Pension has appealed to the Supreme Court to hear a case regarding a group of customers that transferred from guaranteed pensions to market interest rate pensions in the former Finanssektorens Pensionskasse (FSP) in 2011.

The case concerns 176 customers who in 2011 chose to give up their guaranteed pension in FSP and switch to a pension at market interest rates. In connection with the change, customers received information about the investment risk, but not about the so-called lifetime risk, which is the risk of lower pension benefits due to the fact that we generally live longer and that the pensions must therefore last for several years.

Earlier this month, the Eastern High Court ruled that AP Pension, which merged with FSP in 2021, must pay compensation to some customers. However, AP Pension argues that High Court has partly assessed the past based on current knowledge and partly disregards the assessments that the Danish Financial Supervisory Authority (FSA) has already made of the transfer.

It believes that not only AP Pension, but the legal position of the entire pension industry is under pressure.

AP Pension CEO, Bo Normann Rasmussen, believes that the High Court has disqualified and completely disregarded the Danish FSA’s assessment of the transfer material and that the court assessed the case on the basis of knowledge about life expectancy and interest rates that were not present at the time.

“At the time, the Danish FSA, like the industry, focused on investment risk and how it was explained and clarified to customers. Lifetime risk, on the other hand, was not a theme of the inspection, and it was not mentioned at all by the supervisors in connection with their thorough review of the re-selection material. Therefore, it amazes me how the High Court more than 10 years later can come to the conclusion that AP Pension must compensate some customers for a risk whose extent was not known at the time,” he said.

“As a pension company, we believe that the assessments made by the industry's official supervisory authority, the Danish FSA, are correct. If it turns out that the courts can reverse these assessments at any time, in the clear light of hindsight, then not just AP Pensions, but the entire pension industry's legal position is threatened.”

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