Danish pension fund ATP returned 5.5 per cent in relation to the bonus potential on its investment portfolio, after expenses, in 2023.

In its annual financial statement, ATP revealed that its investments generated returns of DKK 5.7bn before expenses and tax.

Over the year, the pension fund’s investments in government and mortgage bonds performed strongest, with a return of DKK 4.9bn, followed by listed equity investments, which returned DKK 4.5bn.

However, ATP experienced negative returns on its portfolio of inflation-related instruments (DKK -2.3bn) and real estate investments (DKK -2.2bn).

After the year’s bonus allocation, the fund’s bonus capacity stood at 17.1 per cent at the end of the year.

At the end of 2023, the bonus potential amounted to DKK 104bn and, together with the pension liabilities of DKK 569bn and the supplementary provision of DKK 39bn, members’ assets totalled DKK 712bn.

The latest life expectancy update resulted in a transfer of pension liabilities to the bonus potential of DKK 1.9bn.

Due to a “strong” bonus capacity throughout the year, ATP was able to increase the lifelong pension again for more than one million pensioners among ATP’s members, by 3 per cent.

“ATP is in a good place,” commented ATP CEO, Martin Præstegaard. “Our investment portfolio produced a solid result in 2023 after large fluctuations in both positive and negative directions in the previous years.

“We are true to our investment strategy and think long-term as an investor. Over time, we believe that our investment approach will ensure the members get what we were created to provide: As high a pension as possible while also at the same time ensuring that the pension is predictable, guaranteed and lifelong.”

Despite the positive result in its investment and hedging portfolio, ATP had a result of zero in 2023 due to its implementation of a new accounting standard (IFRS 17).

ATP stated that this had a “significant impact” on its recognition, measurement and presentation of pension liabilities.

As ATP’s assets and returns belong to its members, ATP has no equity.

In accordance with IFRS 17, ATP’s result after transfers to the bonus potential is therefore DKK 0, which according to IFRS 17 it will always be.

“As all of Denmark's pension fund with 5.6 million members, many of whom receive their only guaranteed and lifelong pension from us, ATP is a supplier of financial security,” said Præstegaard.

“It is important to a great many people that ATP has robust finances – because with robust finances, we can increase the pensions we pay out to the people in Denmark.

“We were able to do that once again after 2023, meaning that from 2024, over 1 million pensioners will receive a 3 per cent higher pension from ATP.”

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