Higher Beneficiary Life Expectancy Pushes Denmark Fund Into Hedging Portfolio

Danish pension fund ATP has shifted DKK20 billion ($3.1 billion, or 2.5%) from its $119.3 billion investment portfolio to its hedging portfolio amid new data showing its beneficiaries should live longer than pensions officials had thought.

The fund is extending the beneficiaries’ mortality expectancy by nearly four years for newborn Danish boys and two for girls, leading the fund to reposition its investments. ATP said it has been “carrying out a thorough review” of its life expectancy model for the past six months. Its CEO, Christian Hyldahl, noted the fund expects 40% of all newborn girls in 2018 to see their 100^th birthday.

By moving a chunk of its assets to its hedging operation, the fund hopes to score better returns that it will need to meet the longer lives of its beneficiaries.

The organization uses demographics information from around the world. But it moved to remove Americans because their causes of death are less common in Denmark, such as drug- and traffic-related instances. The US’s data had accounted for 40% of the data in the life expectancy model.

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In addition, Scotland and Luxembourg are now included in the data. Both countries are similar to Denmark in terms of fatalities.

ATP said although total assets will remain the same, the transfer will hinder half-year results. After the switch, its hedging portfolio will be at DKK677.3 billion, leaving DKK99.1 billion in bonus potential, a separate reserve designed tokeep its risk consumption in check.

The mandatory plan covers the retirements, social security, and welfare of more than 5 million members. It is 114% funded.

Tags: ATP, Denmark, life expectancy, Pension

Nine months after its launch, New York City’s Boardroom Accountability Project 2.0 has changed the board policies of more than half of the 151 US companies targeted.

The project aims to change up the board diversity and transparency of the top 151 companies in the New York City Pension Fund’s portfolios—80% of which are in the S&P 500. This campaign aimed to boost the number of women and minorities on boards. The $193.8 billion city retirement system covers five separate pension funds for public employees, teachers and school staff, police, and firefighters.

Initially, in 2014, it focused on opening proxy access to allow large, long-term investors to nominate corporate board candidates.

Since September, more than 85 companies have improved board diversity and increased transparency on their boards’ procedures. More than 35 are now disclosing member qualifications and details on gender and ethnicity.

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In addition, 49 of the selected companies have elected 59 total new directors that fit the campaign’s criteria; and 24 have said they will further diversify their candidate pools for future board searches.

City Comptroller Scott Stringer said that the program is not just about changing corporate board members, but about “setting the best foundation for future generations and enshrining the highest standards for our investments.”

A smaller part of the mission was a string of shareholder proposals New York City Pension Funds sent to six of the 151 businesses. The proposals requested the companies provide more information on boardroom makeup, including detailed data on directors’ skills.

Five companies agreed to disclose the information. Exxon Mobil was the lone refusal.

The full list of companies in the Boardroom Accountability Project 2.0 can be viewed here.

Tags: Boardroom Accountability Project 2.0, Comptroller Scott Stringer, Diversity, ESG, New York City Pension Funds