Investments and Ukraine - Get answers to the 10 most asked questions

The war in Ukraine has resulted in rapidly increasing commodity and energy prices and sent dark clouds over the economy and financial markets. At PFA, we are in daily contact with our customers about what this means for their pension savings and here we will answer the 10 most frequently asked questions.

1. What is PFA doing to protect my savings? 

PFA has a broad portfolio from which we can generate returns. In addition to shares and bonds, this also includes investments in properties, infrastructure, green energy and unlisted investments in companies. These investments are often less sensitive to business cycles and this helps to protect the savings during times of market turmoil. In addition, we can dial our overall risk exposure up and down as needed so that we can position ourselves correctly to address both good times and bad times in the financial markets. However, it is obvious that negative returns cannot be avoided when the markets are falling on a broad basis. In such situations, it is important to put things into perspective and remember that the markets have generated solid, positive returns in the past many years. For example, if you look at a customer with our recommended investment profile C, then in the past seven years, an accumulated return of 46.8 per cent (15 years to go until retirement, including CustomerCapital, 11/3/2015 to 11/3/2022) has been generated.


2. Should I change my risk or investment profile due to the war and the risk of falling share prices? 

Generally speaking, PFA recommends that you stick with your investment choices as pension savings are a long-term investment and the markets will go up and down several times over a long savings period. Just as you do not typically worry about changing risk or investment profiles when the markets are going up, you should not do so because they are going down. If you make such changes frequently, you run the risk of getting in and out of the markets at the wrong times and reducing the effect of the initiatives that PFA is continually taking to manage the risk. If you are getting close to retirement, you also need to keep in mind that risk is gradually reduced in all investment profiles as the retirement date approaches, and this means that the risk of loss is reduced in line with there being less time to recover any loss.


3. What does it cost if I change my investment profile? 

With PFA Invests and PFA Optional, you can change your investment profile three times per month at no cost. The same applies to PFA Climate Plus and moving savings between investment concepts (for example, PFA Invests, You Invest and PFA Optional). After that, it costs 0.5 per cent of the savings that are reallocated in the event of a change/transfer.


4. Does PFA have investments in Russian government bonds or companies?

PFA has no direct investments in Russian shares or government bonds, but via external asset managers, we have a very limited investment in Russian assets - less than DKK 5 million. However, we do of course have investments in a number of Danish and international companies who have some exposure in the Russian market. Here, we trust that they will take the appropriate measures and we also understand that it may take some time to find the right solutions. We are also continually monitoring what political decisions are made so that we can work together to make the right choices in relation to the unfortunate situation in Ukraine.


5. Is it a good idea to switch to PFA Climate Plus now that the green transition is being accelerated? 

There is no doubt that the climate agenda has become more urgent, given that climate policies and security policies are increasingly becoming interlinked. However, the green transition is a process that has been underway for a long time, and therefore the statements that have been made in the last few months are not something that would currently change our recommendation for PFA Climate Plus. If you want to make your savings more green, we suggest you look at our Investment Guide at My PFA ( where you can always get a recommendation about Climate Plus. It is also important to note that our focus on climate issues is very important throughout our entire broad portfolio. We are systematically working on integrating climate considerations in all our investments as we believe that the good returns will increasingly be green - even if oil and gas companies have had some good months due to bottleneck issues, first from the corona pandemic and now due to the war in Ukraine.


6. Will PFA invest in weapons manufacturers or oil and gas companies that are benefitting now due to the war? 

At PFA, we exclude companies that produce controversial weapons such as cluster bombs, anti-personnel landmines and nuclear weapons. The planned European rearmament will have a major impact on a long list of sectors and suppliers that will be involved in supplying technology and equipment to the armed forces. At PFA, we are monitoring developments closely and continually assessing how we should act as an institutional and responsible investor. However, at present, we do not know how the rearmament will impact our investments.


7. How does the increasing inflation affect my pension? 

The most immediate effect is that the increasing inflation is eating away at the purchasing power of savings - we can buy fewer products for the same amount of money. The increasing inflation is to some extent driven by rising energy and food prices. This also means that if the energy and food prices come back down again, part of the lost purchasing power will be regained. The increasing inflation also has an impact on the pension, as it influences the prices of shares and other financial assets. The high inflation means that central banks will increasingly be forced to raise the official interest rates which, all things being equal, will result in generally higher interest rates. This may slow down growth and reduce companies’ earnings, and thus in turn reduce return potential from shares. 


8. What will the war and lower share prices mean for someone like me who is about to retire? 

When share prices drop, your savings will - all things being equal - be reduced and there will be less money for payouts. The projections for the size of the payouts can be seen in the so-called pension forecasts, which will consequently be reduced. The less time there is until retirement the greater the impact of a given decrease will be on the pension forecast. Conversely, there is often less exposure to risk when you are close to the retirement age, so therefore the decreases will typically be less. Customers who have begun their retirement and are receiving payouts will have the size of the payout for the coming year determined in the month of November. Therefore, the current declining markets will, at the earliest, have an impact on pension payments in 2023. Fortunately, there is also still a chance that the financial markets will recover before then.


9. What are the expectations for returns for the rest of the year? 

We have reduced our expectations for returns in 2022, as share prices are currently down by up to 10 per cent and government interest rates have increased, which has a negative impact on bond prices. Even though the war and the current energy crisis negatively impact growth, it is still our assessment that the economic upswing will continue and support gradually rising interest rates and share prices. The latter are expected to be able to recover their losses during the year. 


10. What does the war and price fluctuations mean for customers’ returns in the average interest rate environment? 

At present, the war and price fluctuations have not impacted the interest rate that PFA has specified for our average interest rate products for 2022. In addition, it is important to point out that customers in the average interest rate environment have a guaranteed benefit that is not impacted by the current price fluctuations.