The role of the pension sector

In his recent speech about the role of the pension sector in the economy, Nils Bernstein (Chairman of the Board of Governors of the National Bank of Denmark) traces the path of the small, open Danish economy with its development towards a sustainable budget and private sector savings leading to Denmark going from a debtor to a net creditor nation with a multi-pillared private retirement system. But all is not well: The pension sector is divided in two subsectors of almost the same size - commercial pension companies and labour-market pension funds. While there is practically no competition in the latter, the former shows a strong concentration with 90% of the market under control of the five largest firms. Yet, the commercial sector has a higher average cost base.