Future-proof and sustainable model of CustomerCapital

PFA Pension is adjusting CustomerCapital, which is PFA’s model for sharing profit and risk with the customers. The adjustment ensures that the model will become future-proof and sustainable for both PFA Pension and the customers.

“CustomerCapital was introduced in 2001, and since then, PFA Pension has used the model to return DKK 24 billion to the customers. This was possible because our owners have waived their dividend, which means that the money goes to the customers instead. Now is the time to adjust the model to meet future requirements,” says Mads Kaagaard.

CustomerCapital was introduced at a time when PFA Pension needed extra capital. Since then, PFA Pension has experienced a rapid development, and is now so financially strong that the company no longer needs the extra capital that CustomerCapital provides. In addition, some of PFA Pension’s customers currently have a relatively large share of their savings placed in CustomerCapital. PFA Pension would like to reduce this amount over time, and avoid that others get into the same situation.

“The future-proofing of CustomerCapital does not change the fact that it is an attractive solution for our customers. For the period 2017-2019, we expect the return on our customers’ Individual CustomerCapital to exceed DKK 6 billion. It also does not change our unique business model where our owners accept a maximum annual dividend of DKK 50,000, allowing us to share the profit with the customers instead,” says Mads Kaagaard.

PFA will adjust the CustomerCapital model with the following changes:
  1. As from 1 January 2019, any positive return on Individual CustomerCapital will be paid into the pension customer’s ordinary savings plan instead of into Individual CustomerCapital as was previously the case.* The 2018 return on Individual CustomerCapital will be paid into Individual CustomerCapital.
  2. As from 1 January 2019, Individual CustomerCapital will no longer be accumulated from transfer of savings from other pension suppliers to PFA Pension or in connection with internal transfers in PFA Pension. This means that 5 per cent of transferred savings no longer will be placed in Individual CustomerCapital. Individual CustomerCapital will still be accumulated in the long term by means of regular payments and single payments to pension savings plans.

In 2018, the return on CustomerCapital is expected to be 10 %.

CustomerCapital is PFA Pension’s model for sharing profit and risk with the customers. CustomerCapital is capital base in PFA Pension, and will receive a part of any profit, but will also take part in covering any losses. This means that CustomerCapital may be reduced and, in the last resort, be completely exhausted. Read more about advantages and risks connected to CustomerCapital

*If PFA Pension suffers a loss, Individual CustomerCapital’s share of the loss will be covered by Collective CustomerCapital as long as Collective CustomerCapital remains. If Collective CustomerCapital is insufficient, the loss will be deducted from Individual CustomerCapital in the form of a negative return.