Insurance & Pension Denmark (IPD) has reacted negatively to yesterday’s launch of the Social-Democrat government’s radical plan granting early retirement to nearly 40,000 long-working Danes, taking aim at the financial sector tax that will help pay for it.
Jan Hansen, deputy director of the industry association, said: “What is being presented today (Tuesday) may end up being expensive for ordinary Danes, if it becomes a reality.”
The proposal is to be financed with a special tax from 2023 on the financial sector, which also affects the insurance and pension industry, the group said.
The minority government of Prime Minister Mette Frederiksen yesterday revealed its proposal to give workers aged 61 or over the right to retire if they have spent between 42 and 44 years in the labour market.
Making good on one of its key election promises from last year’s campaign which brought the party to power, the Social Democrats said they expected about 38,000 people to be eligible for early pensions under the new rules by 2022.
The government still has to negotiate with other parties on the reform, the bill for which comes to DKK3bn (€403m) a year. Under the plan, this cost will be covered by the state in the first few years and then from 2023, financed by reductions in tax breaks for the wealthiest as well as a “social contribution” from the financial sector.
IPD said it understood the initiative’s intention to give work-worn people the right to earlier retirement, but was annoyed that its sector had to contribute to its financing.
“In the insurance and pensions industry, our financial contribution to society is already large, and in our section of the financial industry we do our utmost to comply with the social contract and pay close to DKK30bn annually in taxes and fees to our common finances,” said Jan Hansen.
“Therefore, we believe it is wrong that this type of special tax is being imposed on us,” he said.
The tax would reduce the pensions of individual people and would make it be more expensive for people to buy insurance, he said.
On top of this, Hansen argued that the tax would reduce the opportunities to invest pension savings in the green transition.
Meanwhile, Ulrik Nødgaard, chief executive officer of financial sector lobby group Finance Denmark, rejected the idea of one particular industry having to pay for specific welfare reforms, saying it was unsustainable for the whole of society.
“In Denmark, how much of your earnings you have to pay [in tax] doesn’t usually depend on whether you make machines or loans,” he said.