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LD Pensions manages the Holiday Allowance Fund and the Cost-of-Living Allowance Fund on behalf of the Danish state. The assets in the holiday allowance fund were accumulated by Danish workers during a transition period before the 2020 Danish Holidays Act was fully implemented. Roughly 80% of the fund was disbursed during the Covid-19 pandemic, leaving about EUR 2.7 billion that is still managed by LD Pensions.
The Cost-of-Living Allowance fund is a legacy facility dating back to the late 70s. LD Pensions manages the accumulated assets for 435,000 scheme members, who can withdraw their share any time after the age of 60.
LD Pensions delegates 90% of its asset management to a wholly owned entity called Kapitalforeningen LD (KLD). This is an alternative investment fund (AIF) subject to the EU’s AIFM Directive. This structure allowed LD Pensions to enter into an agreement in 2018 with Nykredit Portefølje Administration A/S for the administration of securities, supported by J.P. Morgan Bank Luxemburg as depositary bank and global custodian.
KLD manages the following asset classes for LD Pensions: Danish Equities, Danish Short-Term Bonds, Global Equities (excluding Danish and Emerging Market Equities), Danish High-Grade Bonds, Emerging Market Bonds, Global Inflation Linked Bonds, Environment & Climate Equities, High-Yield Bonds, Emerging Market Equities, Investment-Grade-Bonds, and Credit Investments.
Apart from a small number of exceptions these asset classes are sub-advised by external asset managers. As a state entity LD Pensions is subject to EU public procurement rules. This means that external partners for asset management and other services are required to responds to open tenders published on the LD Pensions website and on the EU’s Tenders Electronic Daily (TED). LD Pensions’ last major asset management tender took place in 2014.
The current external manager roster is the following:
MP Investment Management – Danish Equities
GuardCap (UK), Goldman Sachs (USA), Acadian (USA) – Global Equities
Federated Hermes (UK)/Wealth Invest (SEB) – Emerging Markets Equities
Nordea – Environment and Climate Equities
Bankinvest – Listed Alternatives
Nordea – Danish Short Maturity Bands
Danske Bank/Nordea – High Grade Bonds
BNP Paribas (USA) – Global Inflation Linked Bonds
T. Rowe Price (USA), Insight (USA) – High Yield Bonds
Aegon (The Netherlands) – European Asset Backed Securities
The following are indirect holdings via investment funds:
KKR (Ireland) – Leveraged Loans
Tabula (UK), Apollo (UK), Kinnerton, Petersen & Partners – Other Credit Investments
LD Pensions operates with a strong ESG focus, using its voting rights to support sustainability related initiatives including workers’ rights and biodiversity protection. It votes in all Danish AGMs as well as those of many foreign-listed companies. ESG screening and support is obtained via Morningstar Sustainalytics, MSCI, and Minerva. LD Pensions also participates in various sustainability initiatives including Dansif, the PRI, and the Labour Rights Investor Network (LRIN).
