Danish pension company Velliv has reported that returns for customers with VækstPension and more than 15 years to retirement were between 3 per cent and 4.5 per cent in the first four months of 2023.

It noted that VækstPension Aftryk and VækstPension Index in particular achieved strong returns between January and April.

Velliv stated that the positive development was primarily driven by equities, which had a “good start” to the year.

The pension company’s investments in European equities in particular “performed well”.

Velliv noted that its bond portfolios also contributed to the positive returns, as both short and long interest rates have fallen in the US and Europe as the markets now expect fewer interest rate increases.

This is due to lower inflation and expectations of an economic setback in the US and Europe, with lower interest rates tending to lead to higher bond prices and therefore capital gains in the short term.

“In Velliv, we have cautious expectations for the returns for the rest of the year, as a recession in the USA and Europe has moved closer,” the pension company said.

“In fact, we expect a general decline in share prices here in 2023. Therefore, we have also underweighted share investments in the clients' portfolios.

“However, we are positive when we look two to three years into the future. We expect that the stock markets will do well, as the global growth prospects are, after all, reasonable on the slightly longer horizon. The general higher level of interest rates is also good for long-term returns.

“It is not only in Velliv that we look positively at the future. The independent Council for Return Expectations also sees brighter prospects on top of a tough 2022. The council now expects that pensions will grow faster in the future than what they have so far expected.”

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