Two Danish pension funds — the 55 billion kroner ($9.7 billion) AP Pension, Copenhagen, and the 22 billion kroner Finanssektorens, Hellerup — will merge later this year to create a fund that will rank among the nation's top 10 in terms of assets, said AP Pension CEO Soren Dal Thomsen.
Mr. Thomson will be CEO of the combined entity, which will retain the AP Pension name and be based in Copenhagen.
In a joint statement, officials from both pension funds cited regulation, costs and increasing competition as reasons for the merger, which is pending member and regulatory approval.
“This was a merger to gain cost efficiency,” Mr. Thomsen said. The demand for increasingly sophisticated investment products and the necessary IT support and other costs were rising rapidly for FSP, so officials wanted to enter into a merger that would maintain “superior returns at low cost,” he said.
The merger is expected to save 10% in costs for the combined fund. Both pension funds are “more than fully funded,” Mr. Thomsen said.
Portfolio management decisions for the combined pension fund have not been finalized, but Mr. Thomsen said he does not expect significant changes.
FSP's current staff of 25 employees will join AP Pension's 220-employee staff, according to the announcement.
Mercer advised on the merger, Mr. Thomsen said.