With the 2024 European Parliament election currently taking place, the Danish pensions and insurance industry association says the new lineup of legislators must make it more attractive to invest in Europe, as increasingly, Danish pensions money is being allocated to US assets rather than European securities.
Insurance & Pension Denmark (IPD) said a new analysis it conducted showed the DKK4.6trn (€616bn) Danish pension sector’s investments in the US surged by DKK461bn over the past five years, while the industry’s investment in Europe, excluding Denmark, had fallen by DKK17bn.
The sector now had DKK1.14trn invested in the US compared to DKK861.7bn in non-Danish European countries, the figures showed.
In terms of listed equities, the lobby group said the difference was starker, with Danish pension funds now holding almost DKK300bn in non-Danish EU equities compared to nearly DKK900bn in US listed shares.
Back in 2021, IPD said, the EU was still the geographical area where Danish pension companies had the most investments, but said that situation had fundamentally changed.
“The development is due both to the fact that US companies provide a solid return, and the fact that the US is attracting a lot of new Danish pensions money to the country,” the association said.
IPD chief executive officer Kent Damsgaard said red tape needed to be cut to make it more attractive for companies and investors to set up and invest in the EU, and for more European companies to grow large.
“We also need to look at better frameworks for investing in the green transition,” he said.
The new EU Parliament and the new Commission had to make it more attractive to invest in Europe, IPD said.
The lobby group said it has put forward a catalogue of proposals of measures the EU could take in this regard during the upcoming parliamentary term.
“Of course, it’s good for Danish pension savers that we can reap returns in the US,” Damsgaard said.
“But actually, I think it’s worrying to read that we in Europe aren’t better at creating growth and returns, and so are missing out on necessary investments in companies, wind turbines and roads here in our part of the world,” the CEO said.