PFA comments in Berlingske: Leading on return

Comment: Pension companies must master many things in order to succeed. Low costs. Accountability. Relevant advisory services etc. One thing is however more important than the others: Creating strong returns so that the customers’ savings grow as much as possible. Basically, we exist to create more for the customers to live on.

Therefore, return is highly important in this industry. And since the turn of the year, approximately 2,700 articles have been published in the media about return and pension. Bottom line is that the return is the way that we are assessed. In that light, there is a need for fact-based comparisons which can be accepted at their face value, so that the market is transparent for all.
Therefore, I nearly choked on my coffee when on Saturday 12 November, I saw a headline stating that PFA is second to Danica on return (»Danica slår PFA på afkast«) in Berlingske Business. Not because we in PFA cannot recognise skilled fellow colleagues, but because the headline is wrong. Facts are that throughout the first nine months of 2016, PFA has generated a total return of 4.8 per cent. The company, which allegedly is ahead of PFA, has – according to their own financial accounts – generated a return of 1.3 per cent.
But why celebrate the wrong leader? This becomes clear when looking at the figures in the following text. An entire pool of the return that PFA’s customers receive has not been included in the calculation. This is the return from PFA’s CustomerCapital. From Q1 - Q3, this is an additional return of more than DKK 1 billion which goes to the customers’ savings. And this is because PFA does not have any shareholders that are to receive dividend.
That this fact is ignored suggests that we must become better at explaining PFA’s profit sharing model to our customers. CustomerCapital involves that if the individual customer chooses to place his or her payments as risk capital for PFA, the customer will receive an extraordinarily high return on that part of the customers’ savings. Currently, this amounts to 20 per cent of up to five per cent of the savings. This means that the return mentioned in the text in Berlingske is lower than our customers’ real return. There are many current accounts, but facts are that PFA’s return inclusive of CustomerCapital is 4.9 per cent and not 4.3 per cent as the text claims.
A focus on return is positive. It keeps us up to the mark. But the readers are left in the dark if only parts of the return are presented to be the truth when comparing products. And that will not do.