Danish Network Partner Danica Pension recently introduced a new retirement savings plan that is storming the market. The new product combines the advantages of earlier products with improved opportunities for higher yields without any increased risk of loss. “This is the product of the future,” says Jesper Winkelmann, Sales Director of Danica Pension.
The risk-return balance
Everyone saving for retirement dreams of a pension scheme that generates high returns without risk. However, a high return is synonymous with shares, which are too risky an investment for many savers. As a result, most people saving for retirement select a traditional pension scheme with fixed and guaranteed benefits. The problem is that these plans produce small returns since most of the savings are invested in bonds.

Danica Balance – share investments with managed risk
Danica Pension’s new Danica Balance product offers investment in shares without a substantial increase in risk. The mix of shares and bonds is adjusted according to the client’s situation: the proportion of shares is high when the client is young, and the proportion of bonds is high when retirement age approaches. Danica Pension manages the investments and ensures that ten years prior to retirement, a guarantee is linked to the scheme securing both the client’s accumulated savings as well as the contributions for the next ten years.

Combining the best
Jesper Winkelmann explains further: “We have chosen to combine the best aspects of our two existing products. The possibility of a better return when investing in shares via Danica Link, combined with the security of our traditional product.”

The product of the future
According to Jesper Winkelmann, products with long guarantees and relatively low returns are now out of date, making Danica Balance the product of the future. Danica Balance is expected to outperform the traditional product, however Danica Link, which allows clients to adjust their share portfolios themselves, will continue to exist.

Higher returns with low costs
“Clients today are interested in a higher return. Danica Balance gives them a product where a good return is secured for the same costs as for the traditional product, and at a lower cost than with Danica Link. Of course, there will always be individuals who prefer Danica Link as they think they can beat the market,” says Jesper Winkelmann.

Danica Balance was launched in May 2005, since when Danica Pension’s sales staff have experienced very high demand for it from existing as well as new clients. Indeed, since 1842 this is the first product that clients have actively requested. To date, some 50 000 Danica Pension clients have opted for market rate products, and more than 50% of new business is invested in market rate products.

For more information, please visit www.danicapension.dk