Top Pension Industry Promises Only That Savers Won’t Lose Money
(Bloomberg) -- Come next year, the best that Denmark's top-ranked savings industry can pitch to prospective customers is only that they won't lose money.
Denmark's financial regulator is planning to lower to zero the maximum guaranteed return that pension and life insurance companies can promise to customers looking to place their savings. It's been at 1% since 2010.
Danish legislation “says that you have to choose your guarantee level with caution, and to be cautious in the current market you have to go down to 0%,” said Per Baertelsen, assistant director general at the Financial Supervisory Authority. “The companies would expect this change, given that interest rate levels have been low for quite a prolonged period.”
Read more: ECB Negative Rates May Remain for Some Time, BIS's Coeure Says
The move, due in January, is largely symbolic, as companies can offer customers lower returns than the allowed cap. Faced with extraordinary low bond yields, some have already taken the step in order to better manage their risks. The pension fund for doctors, for instance, says it'll drop its guaranteed rate, already at minus 0.5%, to minus 1.5% in January.
The cap, which has been as high as 5% in the past, is based on bond yields, which have plunged. Investors are currently paying to hold Danish government debt.
Still, there's an upside to a lower guarantee, since it allows companies to invest in areas where the returns might be higher than those provided by bonds, Baertelsen said.
©2020 Bloomberg L.P.
-
Opinion | India at 38: From Innovation Overperformer to Innovation Powerhouse
India now has 453 VC-backed deep science startups, 18 of them late-stage, after 117 percent growth since 2020. Laurus Labs, at USD 9.3 billion, is the most valuable deep science company in any middle-income economy outside China.
-
Navigating Energy Crossroads: S Jaishankar's Call For Diversified Supply Chains At G20 Ministerial Meeting
As geopolitical fault lines continue to test maritime trade routes and commodity flows, Jaishankar's message remains pertinent: true economic resilience requires open markets, protected transit lines, and a genuine commitment to multilateral cooperation rather than coercion.
-
Indians Are Travelling, But Not Every Journey Is A Holiday | The Week In Whys
Pilgrims, patients and working women are the real travellers, and the system hasn't quite caught up with them.
-
Getting To Work Costs Women More | The Reason Why
It is not just about women paying more than men. It is about women paying much more in cities than in villages.
-
AI Bias In Investing Cannot Be Eliminated, But It Can Be Governed
Framing is a particularly important example as identical financial information presented in terms of gains rather than losses can lead an LLM to reach a different assessment.
-
Joining The Dots | Dark Skies, Steady Diya: Why Hope Holds This Diwali
With war, a weak rupee and foreign outflows weighing on sentiment, policymakers at the NDTV World Summit and market veterans at NDTV Profit Ignite: Diwali Edition offered the same advice: stay invested and filter out the noise.
-
The Curious Case of Equitas Small Finance Bank And A CEO Who Quit For Stock
PN Vasudevan believes persistent investor concerns over a perceived conflict of interest had become a governance overhang on Equitas Small Finance Bank's stock, even as the lender improved profitability and asset quality.
-
Talking Points This Week: AI Cash Burn, A Tiger Comeback And An India That Still Finds Its Own Path
India is not immune to higher oil or tighter global liquidity, yet its earnings base is broader, its domestic policy levers are still available.
-
Foreign Investors Own Half Of HDFC Bank and ICICI Bank. An LTCG Cut Could Matter Most Here
Foreign portfolio investors have US$115 billion parked in HDFC Bank, ICICI Bank. If the government cuts long-term capital gains tax, Jefferies says returning foreign money could land here first.
