LD Pensions’ global equity funds ended 2021 with returns of around 30 per cent, and over the past three years the equity funds have delivered returns of approximately 100 per cent, equivalent to a doubling of the accumulated funds. Strong returns on equities also contributed to a high return of 8.3% in LD Discretionary, where the majority of the assets in The Cost-of-Living Allowance Fund are invested. Over the past three years, the LD Discretionary savings have increased by 21.2% with moderate risk.
Bond markets have long been under pressure from low interest rates, and in 2021, inflation and the prospect of interest rate rises triggered a fall in prices. In light of this, it is encouraging that LD Mixed Bonds ended the year with a return of 0%, whilst LD Short-Term Bonds and Nordea Invest Bonds recorded losses of 1.2% and 2.9% respectively.
Holiday Allowance funds were gradually invested
For members with accrued holiday allowance funds, it was significant that a large proportion of their assets in 2021 were held by their employers and therefore could not be invested. As regards the portion of the assets that employers had paid in and which LD Pensions invested, it was necessary to invest cautiously in the spring of 2021 to limit the risk of loss during the second round of early Holiday Allowance payouts. The result for 2021 was a 3.7% increase in the value of the accrued holiday allowance funds, after pension return tax and costs. Since the funds were frozen, the value of the accrued holiday allowance funds has increased by 4.6%.
At the start of 2021, 90% of the holiday allowance funds were held by employers, and only 10% could be invested. During 2021, many employers paid holiday allowance funds into the fund. Consequently, approximately 60% of the assets were invested by the end of 2021, whilst the remainder remains with employers. LD Pensions’ investments of holiday allowance funds yielded a total return of 7.5% in 2021. The funds held by employers also made a positive contribution, yielding a return of 2.0%. After deducting costs and pension return tax, this results in a net return to members of 3.7% for 2021. This represents a clear preservation of real value in light of price trends.
More information on returns from the Cost-of-Living Allowance Fund
Members are free to allocate their accrued cost-of-living allowance funds to different portfolios as they see fit. However, the majority keep their entire savings in LD Discretionary, which is a mixed investment portfolio with moderate risk.
As a member, you can view your own return in Danish kroner and øre by logging into the self-service portal at ld.dk using NemID.
More information on returns on the Holiday Allowance Fund
The return on the accrued holiday allowance funds held with the Holiday Allowance Fund is updated once a month. A net return, after costs and pension return tax, is reported. In 2021, the annual costs were extremely low at approximately 0.05% of the fund’s assets. In 2022, a larger proportion of the assets will be invested, and investments will be made with a higher level of risk in order to lay the foundations for higher expected returns. Consequently, costs will be higher in 2022, but will still remain at a low level.
As a member, you can view your accrued holiday allowance funds and the return on them in kroner and øre by logging into the self-service portal via borger.dk. Please note that the return is not credited until the third banking day of the month.
Ongoing market analyses
Read the latest news article featuring a market analysis of LD Pensions’ returns.
