ATP, Hilleroed, Denmark, might sell $36 billion of long-term German bonds unless Chancellor Angela Merkel moves to block a tax on financial transactions.
Such a levy “would instantly destroy our business model and would force us to invest differently,” Carsten Stendevad, CEO of the $140 billion pension fund, said in an interview at his office in Copenhagen. “The moment they would do this, many investors would start looking for other safe havens.”
Executives overseeing Europe's pension savings are adding their voice to bank industry warnings that a tax on financial trades would miss its mark and end up hurting average citizens. ATP estimates the levy would cost it “hundreds of millions of dollars,” eroding pensioners' returns. Ms. Merkel said the German government is listening to investor complaints about the proposed levy and will take their views into account.
Moving ahead with a tax model that hits pension savers “would obviously be a very bad thing to do,” Ms. Merkel said in a June 14 interview at the Chancellery in Berlin. Still, she restated her government's commitment to some form of tax on transactions, citing the disparity between value-added taxes on consumer goods and “basically free” financial transactions.
Policymakers in Europe originally proposed the tax in an effort to prevent a repeat of the worst financial crisis since the Great Depression. European Union Tax Commissioner Algirdas Semeta has said the levy would encourage pension funds to avoid secondary markets and stick to long-term investments.