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The Danish government is putting pressure on the country’s DKr5.5tn (€737bn) pensions industry to invest more in the domestic economy, as some retirement funds reassess their exposure to the US on concerns about its fiscal position and tensions over the future of Greenland.
Morten Bødskov, Denmark’s minister for industry, business and financial affairs, told the FT that rising geopolitical tensions mean pension schemes must be more active in supporting the domestic labour market and the development of new technologies, both in Denmark and the continent more broadly.
Pension funds “need to invest more in Europe, more in Denmark and especially in new technologies”, he said.
“We have a lot of capital in Europe but the problem is that it’s too passive in comparison to what you see in the US, including unfortunately our pension funds,” he added.
His comments come after US President Donald Trump’s threats of tariffs on European countries in his attempt to acquire Greenland triggered a political crisis and financial market turmoil last month. That added to some European pension funds’ existing concerns about being overly exposed to US assets, with a tumbling dollar and rising Treasury yields already making some investors nervous.
Denmark has the EU’s second-largest pension system after the Netherlands, with assets of more than 200 per cent of GDP, according to the OECD.
Bødskov said pension funds are discussing “the consequences of the world we’re living in and the uncertainties that come on a daily basis now”.
He added: “I think it’s important that they remember they also have to invest in the future jobs of their members created in Europe and Denmark . . . That’s why they have to invest more here.”
A number of Danish pension funds have started to lower or remove their allocation to the US Treasury market, citing concerns over the fiscal position of the world’s largest economy.
PFA — Denmark’s largest commercial pension fund — sold its Treasury holdings last year in anticipation of a weaker dollar. AkademikerPension said it would sell its $100mn US Treasury portfolio by the end of last month, with the decision “rooted in poor US government finances”, although the rift between Europe and the US “didn’t make it more difficult to take”.
“Several pension funds have lowered their portfolio exposure to US Treasuries now compared with one year or two years ago,” said Kent Damsgaard, chief executive of Insurance & Pension Denmark, a trade group representing most of the industry.
He said the situation in Greenland added “a huge portion of political uncertainty” pushing up the risk of holding US Treasuries “and other assets across the US, although the Danish pension funds are still committed to US-listed companies”.
Denmark’s pension funds had about DKr659mn invested in domestic equities at the end of November compared with DKr1.15bn in US shares, according to data from Danmarks Nationalbank, the country’s central bank.
While their allocations to US equities increased last year, the growth rate has slowed, according to data from I&PD. US equity holdings grew 6.7 per cent across the Danish pension and insurance sector in local currency terms last year, down from a 22 per cent rise in 2024 and 18 per cent growth in 2023. Their allocation to Europe rose 2.9 per cent last year, up from 2.6 per cent the previous year.
Peter Stensgaard Mørch, chief executive at PensionDanmark, a public and private sector retirement fund managing DKr369bn, said the fund shifted 10 per cent of its listed equity portfolio from North America to Europe at the beginning of March last year but has not made any major geographical reallocations since then.
The fund has between DKr2.5bn and DKr3bn invested in venture capital globally, but “over the past 18 months we have had a dedicated focus on companies in sectors where Denmark has a competitive strength”, such as quantum computing.
To direct more money into Danish start-ups, the government has — alongside the Novo Nordisk Foundation — seeded a state-backed venture fund, providing DKr1bn for early-stage companies.
As part of the government’s push to boost domestic investment, Bødskov convened a meeting of the heads of Denmark’s largest pension funds on Friday to encourage them to invest in 55 North, a fund focused on investments linked to quantum computing in Denmark and Europe and backed by the state investment vehicle, with the aim of doubling the size of the fund.
“It is clearly an opportunity for them to invest more in this partnership . . . they have to be more active here,” Bødskov said.
While many pension fund managers say they are keen to seek out opportunities in Denmark and that returns look attractive, one senior executive who declined to be named described the approach as “odd”, with the government in effect fundraising for a single portfolio.
Damsgaard of I&PD added it was “right” that the minister focuses on incentives to invest in the venture market but added that he thought it was “not the right perspective to single out one kind of investment”, adding the focus should be “more ambitious” on how to build more funds.