Danish pension provider, Velliv, has urged pension savers to remain in their current savings profile, after recent market volatility resulted in negative returns for the start of 2022.

The provider revealed that, as at the end of May, customers with a VækstPension Aktiv with medium risk and at least 15 years to retirement received returns of -9.5 per cent, having previously warned that 2022 has “so far been challenging” in terms of investment.

However, the group emphasised that the recent performance should be considered in the context of historical returns, reporting a return of 33 per cent over the past five years, and as much as 120 per cent over the past 10 years.

In addition to this, whilst the provider predicted increased volatility and exchange rate fluctuations until inflation improves, it suggested that central banks will succeed in efforts to curb inflation.

Indeed, Velliv also explained that whilst there has not been such challenging financial markets seen since the 2008 financial crisis, the global economy is very differently placed now.

In particular, the provider pointed out that the level of debt is much lower amongst both companies and individuals, suggesting that it is “significantly better equipped” to mitigate against the current volatility.

In light of this, Velliv urged pension savers to remain in their current saving profile, warning that it can be “expensive to lose a day of positive returns”, as stock markets can turn quickly based on even small positive news.

The provider also reassured savers that it will continue to actively monitor savings and investments, explaining that it maintains a large spread of risks that ensure optimal long-term management of savings.

“This means that we have many different assets in customers' savings such as shares, bonds, real estate, infrastructure, etc,” the provider stated.

“But it also means that we generally spread our investments on many smaller investments rather than on a few large ones. It has historically proved to be a good strategy, which has ensured customers a good excess return."

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