How CustomerCapital works
PFA Pension’s objective is to create as much value for the customers as possible. This is, among other things, ensured through our model for distribution of profit and risk, which we call CustomerCapital. The majority of PFA Pension’s customers with pension savings currently has CustomerCapital. In 2023, the interest rate on CustomerCapital was 8.0 per cent before pension yield tax. In future, the interest rate on CustomerCapital may change, and it may also be negative. PFA Pension fixes part of the payment of interest and is therefore also entitled to make changes to it.
CustomerCapital consists of Individual CustomerCapital and Collective CustomerCapital.
Below, you can read more about how the model works on a general level. The detailed rules in force at any time appear from the regulations listed at the bottom of the page and from PFA Pension’s technical basis, which has been reported to the Danish Financial Supervisory Authority.
Payments to Individual CustomerCapital
From 1 January 2024, 2 per cent of transfers of pension savings from other pension suppliers to a market rate plan with PFA Pension will be paid to Individual CustomerCapital.
Individual CustomerCapital will also be accumulated on transfer of pension savings from other pension suppliers to market rate plans with PFA. On transfer from another pension plan with PFA Pension, Individual CustomerCapital will be accumulated so that, after the transfer, the share in Individual CustomerCapital amounts to 2 per cent of the sum of savings and Individual CustomerCapital. If the share is larger, Individual CustomerCapital will not be accumulated on this transfer.
With Individual CustomerCapital, you will receive a part of the return which in other pension companies would be allocated to the owners. Individual CustomerCapital forms part of the capital base in PFA Pension, which makes up PFA Pension’s financial strength. Technically, Individual CustomerCapital is a so-called bonus provision, type B.
How interest is added to Individual CustomerCapital
With Individual CustomerCapital, you will receive at least the same interest rate every year as PFA Pension generates on the shareholders’ equity before tax. If you had CustomerCapital in 2023, the interest rate was 8.0 per cent before pension yield tax.
For 2024, the expected annual interest rate on Individual CustomerCapital is 10.0 per cent before pension yield tax, however, the rate may be lower or higher. The entire annual interest will be distributed to the pension savings through a single addition of interest in April 2025 (provided that you still have your pension plan with PFA Pension).
A positive interest on Individual CustomerCapital will be deposited into your ordinary savings plan. Any negative interest will be deducted from Individual CustomerCapital. Negative interest on Individual CustomerCapital may occur if PFA Pension sustains a loss and Collective CustomerCapital has been exhausted and therefore cannot cover Individual CustomerCapital’s share of the loss. This is explained further in the menu "What about the risk".
PFA Pension can choose to introduce a temporary interest on Individual CustomerCapital which can be either positive or negative. At present, the temporary interest is fixed at 0 per cent but may be subject to regular changes by PFA Pension.
| Interest on individual CustomerCapital, per cent before pension yield tax
Collective CustomerCapital contributes to your return
Collective CustomerCapital is a special bonus provision which PFA Pension’s owners, in the past, have built up of the shareholders’ equity in PFA Pension.
PFA Pension has established Collective CustomerCapital for the benefit of the customers with PFA Pension at any time who have Individual CustomerCapital. It is the purpose of Collective CustomerCapital to be instrumental in providing customers with Individual CustomerCapital with the possibility of achieving an increased interest on their Individual CustomerCapital. This is possible by PFA Pension transferring money from Collective CustomerCapital as payment of interest on the customers’ Individual CustomerCapital. PFA Pension can continually decide how much should be transferred from Collective CustomerCapital as interest on Individual CustomerCapital, and thus, how high the interest on Individual CustomerCapital should be from year to year. However, the interest on Individual CustomerCapital must, at least, correspond to the interest on PFA Pension's equity. According to agreement with the Danish Finance Supervisory Authority, the distribution of Collective CustomerCapital must be finalised no later than at the end of 2053.
Besides contributing to the payment of interest on the customers’ Individual CustomerCapital, the Collective CustomerCapital also covers, for as long as possible, any losses on the customers’ Individual CustomerCapital. Below, you can read more about the risk of CustomerCapital.
Collective CustomerCapital means – as the name suggests – collective funds. Among other things, this means that you will not receive a share of Collective CustomerCapital if you transfer your pension plan from PFA to another supplier or if you cancel your pension plan.
The total CustomerCapital achieves at least the same interest rate every year as PFA Pension’s shareholders’ equity before tax.
What about the risk?
Along with the shareholders' equity and Collective CustomerCapital, Individual CustomerCapital forms part of PFA Pension's capital base. By placing savings in Individual CustomerCapital, PFA Pension’s customers have a share in the profit PFA Pension generates. However, Individual CustomerCapital is also meant to cover for any losses in PFA Pension. As long as Collective CustomerCapital remains, this will cover Individual CustomerCapital's share of any losses. When Collective CustomerCapital has been exhausted, Individual CustomerCapital will, as a rule, be subject to the same risk as the shareholders’ equity. This means that Individual CustomerCapital may be reduced (negative interest) and, in the last resort, be completely exhausted.
You cannot change your accumulated Individual CustomerCapital into ordinary savings. Thus, deselecting CustomerCapital means that no further payments will be made to CustomerCapital.
Generally, Individual CustomerCapital will follow the cancellation of the pension plan, for instance, in connection with transfer to another pension supplier. However, this will not apply if PFA Pension does not meet the solvency requirement.
CustomerCapital and retirement in market rate
If your share of Individual CustomerCapital on retirement exceeds 2 per cent of the sum of your savings in the market rate environment and Individual CustomerCapital, the excess part of your Individual CustomerCapital will be transferred to your ordinary savings plan and will then accrue interest like pension savings. The remaining share in Individual CustomerCapital will still accrue interest like Individual CustomerCapital and will be paid out regularly together with your pension payouts.
CustomerCapital and retirement in the average interest rate environment
When the payouts from your average interest rate plan begin, it is no longer possible to have CustomerCapital. Instead, your individual CustomerCapital will be transferred to your savings.
Changes to Individual CustomerCapital for pension savings
PFA Pension can decide that accumulated Individual CustomerCapital, or a part of it, must be converted into pension savings.
It applies to market rate plans that the assumptions applicable to conversion of Individual CustomerCapital to savings are described in the terms and conditions of pension
. In brief, these preconditions concern securing a reasonable, expected payment of interest on Individual CustomerCapital in proportion to risk and/or ensuring an appropriate capital structure in PFA Pension.
A conversion will be made according to rules notified by PFA Pension to the Danish Financial Supervisory Authority
Regulations on CustomerCapital – market rate
Regulations on CustomerCapital – average interest rate
Changed terms and conditions of CustomerCapital as at 1 January 2024
As at 1 January 2024, PFA Pension made the following changes to the terms of CustomerCapital:
1. The percentage of payments to Individual CustomerCapital is reduced from 5 to 2 per cent.
2. The new is that 2 per cent of transfers of pension savings from other pension suppliers to PFA Pension market rate will go to Individual CustomerCapital. In addition, Individual CustomerCapital will be accumulated on transfer of pension savings from another pension plan with PFA to the market rate environment if the sum of savings and Individual CustomerCapital amounts to less than 2 per cent at the time of transfer.
3. On retirement in the market rate environment after 1 January 2024, shares that exceed 2 per cent in Individual CustomerCapital will be transferred to the pension savings and will receive interest like pension savings.
4. In future, PFA Pension will under certain conditions be given an extended opportunity to change accumulated Individual CustomerCapital into pension savings.
Together with these adjustments, the expected annual interest rate on Individual CustomerCapital will from 2024 (with addition of interest in 2025) be raised from 8 to 10 per cent. The actual annual interest is fixed by PFA Pension each year and may deviate from the expected.
From January 2024, the changed terms of PFA CustomerCapital will appear from your terms and conditions of pension for market rate at My PFA under Documents.