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Introduction

Foundation of LD 

The Danish parliament decided to found LD at the end of the 1970s with the object of managing Denmark's “frozen cost-of-living allowances”. This concept was a way of automatically adjusting the wages to cover the increase in cost of living.

These allowances were meant to be paid to the employees to offset inflation. However, the government decided to pay them as a supplementary lump sum pension upon retirement.

In 1980, the government therefore entrusted LD with EUR 1,036m deposited in 2.5m member accounts. LD has not received any contributions since 1980, but its assets have increased to about EUR 7m because cumulative returns exceed the payments made by the fund.

Since 1980 LD's investments have yielded an average return of 9.8 % per year after tax and costs. 

Pensions

LD pays a lump sum when a member reaches retirement age and leaves the workforce permanently (or when a member reaches the age of 60). Since its formation in 1980, LD has paid out funds from 1.8m accounts, which leaves the number of accounts where balances have not been distributed at 0.8m.

Investment pools and LD Discretionary Investments

Since 1 January 2000, LD's members have been able to invest their savings in investment pools. It is now possible to choose between 10 different pools of which four are offered by the four largest mutual funds in Denmark.

Members, who do not choose pools, invest all their savings in the large joint portfolio, LD Discretionary Investments. This pool also contains any savings which the pool investors have not invested in pools.

The pool assets represent about 9 % of LD's total assets. About 12 % of the members had opted for pools in respect of part of or all of their savings.

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