DENMARK - The amount of money going into Danish personal pensions in Denmark fell last year for the first time since 1999, depressed by the unstable economic conditions, according to Danish insurance association F&P.

Total contributions into all types of Danish pension schemes were at the highest level ever last year, but they had increased at the slowest rate for 10 years, a study from the association showed.

Contributions to personal pensions fell by 0.4% to DKK24.25bn (€3.24bn) in 2007 from DKK24.35bn the year before, it said.

Between 2006 and 2007, total deductible pension contributions to insurance companies, pension savings firms (pensionskasser) and banks rose 6.4% to DKK109bn from DKK102.5bn.

By comparison, in the course of the last 10 years, pension contributions rose by an average of just under 9% a year, it pointed out.

"Pension contributions were lower than expected in 2007," said Carsten Andersen, deputy director of F&P.

"This was mainly because less money was going into personal pension plans. We are still seeing expansion in labour market pensions, where both the mandatory percentages and the number of employees included in labour market pension schemes have risen," he said.

Labour market pension schemes saw an increase in contributions of 7% in the year, up to from DKK66.7bn to DKK71.3bn. But the association pointed out the general rise in wages and the increasing contribution rates agreed by collective bargaining on their own had led to a contribution growth rate of between 6% and 6.5%.

"We will probably see a stable rise in contributions to labour market pension schemes of 6-7% in future," Andersen said. "Contributions to personal pension will be more dependent on the economy and interest rates."

This was the second year in a row contributions to personal pensions managed by insurance companies and pensionskasser fell. But there was also a fall this year even when contributions to personal pensions with banks were included.

"One has to look right back to 1999 to find a fall in contributions to personal pensions," F&P noted.

That said, there had been a shift over the last few years from personal pensions to labour market pensions, the body acknowledged.

"With the rise in the number of employees included in labour market pension - 66% in 1997 and 79% in 2006 - there has been a movement away from personal pensions. At the same time, people generally have higher contribution rates than 10 years ago," the association said.

"This development means that labour market pensions will be sufficient for a larger group of employees, and so there is no need to supplement this with a personal plan," said Andersen.

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