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 2022, 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
If you have CustomerCapital, an amount currently corresponding to 5 per cent of your payments and single payments made to your savings plan will go to Individual CustomerCapital. From 1 January 2024, the percentage will be changed to 2 per cent.
From 1 January 2024, 2 per cent of transfers from other pension companies will be paid to Individual CustomerCapital. Transfers that are requested and completed during the period from 1 July 2023 to 31 December 2023 will accumulate Individual CustomerCapital as at 1 January 2024. Until 1 January 2024, the relevant transfer will be invested together with the other savings. Individual CustomerCapital will be accumulated on transfer of pension savings from another pension plan with PFA Pension if the share in Individual CustomerCapital amounts to less than 2 per cent of the total savings (incl. Individual CustomerCapital).
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, as a rule, receive at least the same interest rate every year as PFA generates on the shareholders’ equity before tax. If you had CustomerCapital in 2022, the interest rate was 8.0 per cent before pension yield tax.
For 2023, the expected annual interest rate on Individual CustomerCapital is 8.0 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 2024 (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 (reserve) which PFA Pension’s owners built up the shareholders’ equity in PFA Pension.
The PFA Foundation and the organisations that own PFA established this reserve for the benefit of PFA Pension’s customers at any time who have Individual CustomerCapital. Collective CustomerCapital can contribute to paying a high interest on Individual CustomerCapital. In this way, it is possible to transfer an amount every year from Collective CustomerCapital to Individual CustomerCapital until Collective CustomerCapital has been exhausted. This means that customers with Individual CustomerCapital will be given the opportunity to receive a high interest rate on their Individual CustomerCapital. Over a period of years, Collective CustomerCapital must be distributed to both “existing” and “new” customers with Individual CustomerCapital.
Collective CustomerCapital is – as the name suggests – a collective reserve. 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.
As a rule, 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
If your share of Individual CustomerCapital on retirement after 1 January 2024 amounts to more than 2 per cent of your savings in the market rate environment (incl. Individual CustomerCapital), the excess part of your Individual CustomerCapital will be transferred to your ordinary savings plan. The remaining part of your Individual CustomerCapital will be paid out successively together with your other savings.
Average interest rate, payouts and CustomerCapital
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.
Regulations on CustomerCapital – market rate
Regulations on CustomerCapital – average interest rate
Changed terms and conditions of CustomerCapital as at 1 January 2024
On 1 January 2024, PFA Pension will effect the following changes to the terms of CustomerCapital:
1. From 1 January 2024, an amount corresponding to 2 per cent of the payments and single payments made towards savings will be transferred to Individual CustomerCapital.
2. From 1 January 2024, 2 per cent of transfers of pension savings to PFA Pension will be transferred to Individual CustomerCapital. A temporary arrangement will apply to transfers from 1 July 2023 to 31 December 2023. Transfers to pension plans in PFA Pension that have been established via Letpension will be subject to other rules.
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 circumstances be able to change accumulated Individual CustomerCapital into savings.
As a result of the adjustment, the expected annual interest rate on Individual CustomerCapital will from 2024 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, you can view the changed terms of PFA CustomerCapital applicable to pension plans in PFA Plus (market rate) in your terms and conditions of pension at My PFA under Documents.