Interview: Martin Prestegaard, CEO of ATP | Interviews

His leveraged investment portfolio, which takes 20% of all contributions and tries to achieve returns high enough to support guaranteed pensions, lost 36.4% during the downturn in global financial markets between January and June this year.

The bonus potential has fallen to DKK 108bn (€15bn) by mid-2022 from DKK 160bn at the start of January. And with rising interest rates hitting bond prices, ATP’s overall portfolio – which largely consists of fixed-income instruments providing pension guarantees – ended June worth just DKK 732.6bn, compared with DKK 947.3 DKK billion at the end of 2021

As ATP counts the entire population of Denmark as members, it was vital for the scheme to make sure pensioners would still receive the same amount at the end of the month.

The investment loss is not a catastrophe, Præstegaard said, because ATP has a guaranteed product. “So our members actually feel that their pensions are unchanged and that is our main role in the Danish pension system,” he says.

Conducting his first press conference, Præstegaard was calm and businesslike – the type of presence the organization needs to inspire public and political confidence to maintain its legitimacy.

Præstegaard describes himself as a “pretty stable” person. “I think being there and keeping calm when the storm comes has always been an exciting thing,” he tells IPE.

Præstegaard is ATP’s first CEO in decades with a strong background in government; the latter was the pension fund’s first CEO from 1989 to 1998, the late Pale Simonsen, who was a government minister.

After studying political science at the University of Copenhagen, Præstegaard worked in the Ministry of Finance and over the years also worked as the Finance Director of the national broadcaster DR before returning to the Ministry in 2014 as Permanent Secretary.

“In many ways, I’m drawn to large institutions with some public significance and public weight,” he says.

With Præstegaard now at the helm, the ATP management can be seen as a return to safe territory after the difficult period surrounding the resignation of former CEO Christian Hildahl in November 2018.

Hildahl left amid a political firestorm over the practice of increasing speculative returns with dividend transactions to avoid tax, which occurred under his leadership at Nordea 10 years ago.

This practice has angered many people in Denmark, and feelings about the integrity of the management of Danish financial institutions have also grown because of the money laundering scandal at Danske Bank.

There has been speculation that a permanent secretary of state in a ministry might be preferred as the next ATP chief executive to avoid another damaging political furore. But such a candidate may not meet the Danish FSA’s ‘fit and proper’ criteria for approving financial business leaders due to a lack of experience in managing the financial sector.

Wide support

Beau Foged, who was Hildahl’s replacement, agreed in June 2019 to take on the lead role after initial reluctance due to the media attention the role would attract. At the same time, Præstegaard was brought in as Deputy CEO.

Præstegaard says he was reassured that there was solid support in Denmark for the ATP scheme as part of the country’s pension system.

“The vast majority of political parties in Parliament have just changed the ATP Act to change our business model so we can create even better pensions,” he says.

“It’s been very clear in this process that we enjoy broad support and I think people understand that it’s good to have different companies with different roles in the system,” says the CEO.

In addition to its original task of managing the ATP pension scheme, founded in 1964, the organization now has an administrative business arm alongside its pension and investment division, which disburses two-thirds of all Danish state aid amounting to DKK 300 billion per year.

Præstegaard agrees that his experience in government can be an asset not only on the administration side, but also in the pension and investment business because of his experience in regulatory matters.

“And of course one of my jobs is to interact with the stakeholders around us, so I’m pretty confident I can handle that part of it,” he says

Investment portfolio

Præstegaard sees the main challenges for ATP under his leadership in developing the investment portfolio and being a responsible investor.

“Building the right portfolio in this environment is a challenge, of course, and we still believe in our all-weather risk factor approach – but we need to address that and develop it.

“Then, of course, when we look at specific asset classes, like direct investments in companies and real estate, you have to do even better all the time. So basically it’s hard work, going to the office every day to achieve that.”

The overall strategy must be constantly evaluated and refined, he said. “And it’s more of a challenge now because we don’t have central banks to help, so we have to focus even more on wealth creation, and in many ways that’s healthier.”

Alongside ATP’s work with its environmental, social and governance commitments, Præstegaard highlights biodiversity as an aspect of environmental sustainability that should receive more attention.

“The issue of biodiversity is much more immature than the climate agenda, which we have been working with professionally for several years.

“When you look at biodiversity, you can see that it’s going in the wrong direction in some parts of the world, and as very long-term investors we need to start to understand that and have some dialogue with our companies in our portfolios to see how they react – and what they can do to stop this massive crisis,” he says.