Comment - December 2011
The Vikings are coming
In a remarkable challenge to the City of London’s dominance in fund management, an agency of the Danish government has launched a UK version of its ‘top-up’ state pension scheme. Denmark’s 4.7 million workers pay £8 per year for a state pension organisation, ATP to manage and invest money deducted from their pay packets. This is about a tenth of the price paid by British workers in private pension schemes. The Danish scheme has delivered annual returns of 7.4% over the last decade and, crucially, gives savers a guaranteed pension that is not entirely dependent on the vagaries of the financial markets.
The UK scheme which is called ‘Now: Pensions’ will be entirely ring fenced from the £80 billion Danish pot which has built up over the last 45 years. Charges will be £18 per year for administration plus a 0.3% annual management charge. The money will be actively managed across shares, bonds and commodities.
Now: Pensions will be competing directly with NEST. The lower charges and proven track record will make it a formidable competitor - if they get their marketing right. Hopefully they will not be using the same person that thought up ‘Now: Pensions’ as being a catchy brand name.
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