Denmark’s pension and insurance industry association has praised the Social Democrat-led government for an element of its new 10-year reform plan, saying it removes obstacles to saving for retirement via the “aldersopsparing” pension vehicle.
Jan Hansen, deputy director of Insurance & Pension Denmark (IPD), said: “Old-age savings [aldersopsparing] plans are crucial to ensure that it always pays for everyone to save up for retirement” – a goal he said politicians had agreed on with the 2017 pension reform.
“However, there have been a number of stumbling blocks for the use of old-age savings,” Hansen said.
“With the government’s proposal, many of these will be removed,” the lobby group’s deputy director said, adding that IPD was very satisfied with the initiative.
Payouts from the old-age pension product, which can be offered as part of an occupational pension, are tax-free and do not reduce means-tested social benefits for the individual.
IPD said that because the government’s new proposal abolished spousal offset for people receiving folkepension (state old-age pension), senior pension, and early-retirement pension, far more working Danes would be able to use the old-age savings vehicle without the risk of offset against the spouse’s state benefits.
Last Tuesday, the government of Danish Prime Minister Mette Frederiksen presented a new 10-year plan for a wide range of reforms which it described as ambitious and requiring “continuous and radical changes in our society”.
The plan to abolish pensions offsetting due to a partner’s earned income was one of several intentions outlined in the “Denmark can do more 1” policy document.
Others include investing DKK4.5bn (€605m) in education, research, the green transition and the labour market; increasing in the maximum unemployment benefit rate; reducing electricity tax and a plan to require people on unemployment benefits to do community work.
IPD said the government’s proposal meant employees in more than 50,000 households would be able to save up in old-age savings without offset in a spouse’s pension – but that the potential was far greater than this.
“Precisely because old-age savings can trigger offsetting in public benefits for others in the household, it is an extremely complex product,” Hansen said.
It was complicated for individuals as well as for the pension firms that advised them, he said, adding that this hampered the proliferation of the product.
“With the government’s proposal and a positive Folketing [parliament], there is hope for a wider spread, and to get much closer to the central pension policy goal that it can always pay for everyone to save up for retirement,” Hansen said.