Home ListingDecember 8, 2015

A Pension Fund Divorce

A trio of Danish pensions have split up after high-level disagreements.

Reported by Featured Author

Unipension, one of Denmark’s biggest pension managers, is to close down after losing two of its three primary clients and founding members.

The DKK 117 billion ($17 billion) group’s CEO Cristina Lage has resigned over the split. A clash of views among senior staff members led to the breakup, according to a statement by the two departing funds’ chairs.

The industry-wide pensions for Danish architects (Arkitekternes Pensionskasse) and veterinary surgeons (PJD) have quit Unipension—which they helped establish in 2008—over a disagreement about cost cutting and the overall direction of the partnership.

They had been unable to agree “to move fast enough in the direction we wanted,” said the leaders of the exiting funds.

The two pensions take DKK 20 billion ($2.9 billion) in assets with them, and 18,000 members. Both are set to appoint Sampension as administrator and asset manager when Unipension shuts down at the end of 2016.

The decision leaves one retirement system—public-sector academics’ MP Pension—as Unipension’s only client. MP Pension is by far the biggest of the three funds at DKK 96.6 billion ($14 billion), according to its latest half-year report.

Each of the three participating funds had a 33.3% stake in Unipension and shared the costs, meaning PJD and Arkitekternes subsidized the much larger MP Pension.

In addition, they failed to agree on the creation of a “fund broker” arrangement, which the exiting funds believed would generated revenue and reduced costs. Unipension was founded in 2008 on the hopes that the three funds would move closer together. Instead, the chairmen said, the trio moved further apart.

CEO Lage resigned over what the company has described as a skilsmisse—literally, a divorce. Lage will exit early in the New Year, with chief finance officer Jens Munch Holst set to oversee the wind-up.

Tina Moses, president of MP Pension, maintained that the remaining fund was of sufficient size to continue to operate independently. She admitted that short-term costs may rise, but said MP Pension would “work to reduce extra costs” and implement “strategic initiatives around the future development” of the fund.