Faroese pension funds see lower returns due to reduced risk

The Faroese Financial Supervisory Authority reports that pension funds in the Faroe Islands take on less risk than their Danish counterparts, resulting in lower investment returns.

According to Jógvan Thomsen, director of the authority, the difference in returns can amount to several percentage points. Over a working lifetime, this gap could reduce a pension savings pot by millions of kroner compared to Danish returns.

The authority does not regulate how life insurance companies and pension funds invest their assets to generate returns. Investment strategies are determined by the funds and institutions managing the pensions.

In 2024, the authority published a report on the return on Faroese pension savings, highlighting the disparity with Denmark.