Danish public pension fund ATP generated a result of DKK -56.8bn in 2022, with losses primarily driven by large negative returns on its investment portfolio.

In 2022, ATP’s investment portfolio returned DKK -64.4bn before expenses and tax.

After expenses, this is equivalent to -40.9 per cent of the bonus potential.

The pension fund described 2022 as an “unusual year”, with steep interest rate hikes and major stock market declines resulting in losses on its investments.

Despite the poor performance last year, ATP noted that the financial losses were greatest at the start of the year and that 2022 ended with a positive result for the fourth quarter if viewed independently.

The greatest negative contributions to the 2022 result came from investments in government and mortgage bonds, with losses of DKK 60.6bn.

Meanwhile, investments in listed equities returned DKK -20.7bn over the year.

Despite these negative performances, ATP’s holdings of inflation-related instruments had a net positive contribution of DKK 11.8bn.

Over the past five years, including 2022, the accumulated net returns were DKK 10bn per year on average.

“ATP has had a very difficult year where we lost a lot of money in our investment portfolio,” commented ATP CEO, Martin Præstegaard.

“We would have been better off without it but 2022 was a challenging year for all investors.

“ATP was hit by losses in both equities and particularly bonds, which constitutes a large share of the investment portfolio, and we also generally have a high level of risk in this limited portion of ATP’s total assets.

“We believe that this is the right long-term strategy, and a 2022 that disappointed in terms of results does not change this. Therefore, we will stick to what we believe serves our members best in the long run.”

In Denmark, 40 per cent of pensioners have no other income than the state pension and ATP.

ATP reassured members that, despite the negative result, there will be no changes to the pensions being paid out.

This year’s life expectancy update resulted in a transfer of pension liabilities to the bonus potential of DKK 3.8bn, or 0.7 per cent of the value of the pension liabilities.

The transfer is an expression of the adjustment to life expectancy due to the actual changes in the past year.

Development in assets and bonus capacity ATP’s reserves (the bonus potential) were at DKK 103bn at the end of 2022 and the pension liabilities were at DKK 575bn.

The bonus capacity, which is the relationship between the bonus potential and the value of the pension liabilities, was at 17.8 per cent.

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