The manager of Denmark’s new holiday fund, which was set up to hold an extra year’s worth of employee holiday allowances until retirement, is now preparing to pay out three fifths of the assets far earlier than envisaged.
The mass payout was agreed last night in negotiations between the Danish government and a majority of parliamentary parties as part of a major economic stimulus package to help the country recover from the COVID-19 lockdown.
Last week Danish Prime Minister Mette Frederiksen had told parliament her government was considering the possibility of handing Danes two of the total of five weeks of their one-year frozen holiday allowance – an idea which has been increasingly debated as a means of supporting businesses.
But in the final version of the economic measures hammered out in the early hours of today, it was agreed that the partial payment of the frozen holiday funds would correspond to three weeks’ holiday in order to start the Danish economy.
In its announcement of the cross-party deal, the government said: “The holiday funds will be available for payment by October 2020. The government will enter into dialogue with the social partners and ATP on the specific implementation.”
LD Funds, which was tasked with running the holiday fund (LD Feriemidler) in 2017, said the political agreement means DKK60bn (€8bn) of the fund’s total DKK100bn will be paid out after the summer.
However, since the majority of the fund’s assets are in the form of loans to employers – allowing companies to keep the assets at work in the business in the years before a staff member retires – LD Funds said the state would initially finance the frozen holiday funds that were to be released early.
LD Feriemidler was established as a result of Denmark’s new holiday law which brought the country into line with EU rules on workers’ entitlement to time off.
This meant staff accrued an extra year’s vacation time in the transition phase between the old regime and the new, the financial value of which was to be held in the fund and paid out on retirement.
Since Frederiksen spoke about the matter last week, both ATP – which administers the holiday fund – and LD Funds have reported a huge volume of enquiries from individuals wanting to know how much they would receive.
But LD said for administrative reasons it was not yet possible to see this amount, which would differ from person to person.
Among the economic measures announced by the Danish government this morning, a government fund is to be established to recapitalise Danish companies, with DKK10bn being set aside for this.
“The fund will contribute to strengthening the capital base of larger, community-based, Danish companies that have exhausted other normal financing opportunities,” Frederiksen’s government announced.
It also said a “restart fund” would be set up under the auspices of the Growth Fund (Vækstfonden).