ATP achieves DKK 3bn in returns after the first half of the year

The first half of 2024 was characterised by both rising equity prices and rising interest rates in the bond markets. This gave ATP a return on investment of 3 per cent in the investment portfolio, which is ATP's reserves.

“Overall, we delivered an expected result in the first half of the year. The return on equities was very satisfactory. On the other hand, rising interest rates led to a loss on our bonds. Both are reflected in the result, which I would describe as expected and generally acceptable in view of market developments,” says ATP CEO Martin Præstegaard.

ATP must ensure the payment of lifelong and guaranteed pensions to all of our members. That is why we hedge the interest rate risk on pensions, which also worked as intended in the first half of 2024.

The investment portfolio generated returns (before expenses and tax) of DKK 3.3bn, which after expenses is equivalent to 3 per cent of the bonus potential. The biggest positive contributions came from investments in Danish and international equities, while bond holdings pulled the result down.

Over the past 10 years, ATP has generated a return of DKK 117bn in its investment portfolio.

The total result from investment and hedging after tax of DKK 0.9bn has been transferred to the bonus potential along with a pool of DKK 1.6bn in connection with the life expectancy update for the year. 

Asset developments

ATP's free funds — the bonus potential — stood at DKK 108bn at the end of the half year and pension liabilities stood at DKK 549bn. The bonus capacity increased by 1.3 percentage points to 18.4 per cent and is on par with the average of the past 10 years. 

“We promise Danes a certain pension that will last a lifetime. At the same time, we have assets we can invest freely. When the relationship between the two - liabilities and free funds - develops positively, our bonus capacity increases. This is good for the Danes, as it increases the likelihood that we will be able to raise their ATP retirement benefit in the long term,” says Martin Præstegaard. 

Administration activity expenses remained low 

ATP maintains a clear focus on keeping expenses low, as they directly affect the size of pensions. ATP’s administration activity expenses in H1 2024 totalled DKK 18 per member or 0.03 per cent of the aggregate assets. This is similar to last year and still low in both a Danish and international context.

Life expectancy update 

This year's life expectancy update resulted in a transfer to the bonus potential of DKK 1.6bn, equivalent to 0.3 per cent of the value of pension liabilities. The transfer is an expression of a minor adjustment to life expectancy due to the actual changes in the past year.

Status of the implementation of changes to ATP's business model 

In 2021, the Danish Parliament adopted a number of changes to the business model of ATP Livslang Pension (Lifelong Pension) by a large majority. The aim is to achieve higher absolute pensions as well as better opportunities to increase pensions on an ongoing basis and secure their real value as time goes by.

The changes resulted in the creation of two new portfolios: Life annuity with market exposure, which was introduced in 2022, and the supplementary hedging portfolio, which started up in 2023.

Operationally, Life annuity with market exposure is fully phased in. However, the assets associated with this life annuity remain relatively limited, as contributions have only been made since 2022. The supplemental hedging portfolio is expected to be fully phased in over the next two years.