Danish ‘wise men’ call for expansion of pension reform plans
A quartet of Danish academics known as the “wise men” has called for a planned pension reform agreement to be expanded to take into account a broader set of pensions issues needing resolution.
The wise men – who make up the presidency of the Danish Economic Councils (De Økonomiske Råd) – published a report last week that included comments on pension reforms brought in as part of an agreement signed in May between the then-coalition government, led by the Liberal Party, and the Danish People’s Party and Radical Liberal Party. The commission focused on increasing the coverage of the senior pension, an early-retirement disability pension.
Under the pact, which would involve 17,000 Danes getting the new senior pension in 2025, a commission is to be set up to look at the benefits and disadvantages of differentiated pensions. There has been debate in Denmark in recent months regarding whether some groups in the labour market should be entitled to earlier retirement than others.
In their report, the four professors said of the commission idea: “It seems sensible to thoroughly consider the issues of differential pension so that decisions can be made on an informed basis.
“However, there are also many other important issues related to the pension system, including the interplay between public services and individual pensions, and the issue of pension coverage for groups with a loose connection to the labour market.
“The issues are complicated and thorough analyses are needed to find solutions that balance the various considerations. It would be natural that the new pension commission was also asked to come up with a comprehensive and long-term solution to these issues.”
The academics said there had been many changes in recent years to Denmark’s pension system, which had increased its complexity, and could create uncertainty about where the best place to save was.
The current four-strong wise men panel comprises: chairman Michael Svarer, professor at Aarhus University’s Department of Economics; Carl-Johan Dalgaard, professor at the University of Copenhagen’s Department of Economics; Lars Gårn Hansen, professor within the Institute of Food and Resource Economics at the University of Copenhagen; and Torben Tranæs, a professor at the The Danish National Centre for Social Research (SFI).
Lobby group endorses wise men
Meanwhile, lobby group Finance Denmark voiced support for the professors’ report and said it was important for a pension committee to be able to investigate other possible improvements to the pension system.
“We endorse the view of the [professors] that this should not only affect the possibility of differentiated pensions, but may also benefit the interaction issue and the residual group challenge,” the financial sector association said.
Related to this, it said the framework for pension products should also be examined to make sure there was enough flexibility for all Danes and provided equal competitive opportunities for all providers of pension products.
“We strongly recommend that a pension commission examine the possibility that banks may offer annuity-like pensions in free competition with the pension companies,” Finance Denmark said.
The general election earlier this month saw power swing to the Social Democrats and away from the Liberal Party, but talks are still going on regarding the formation of the next government.