Insurance and Pension Denmark (IPD) has released figures showing the country’s labour-market pension providers paid a record amount to state coffers last year in the form of pensions return tax (PAL), amounting to DKK50bn (€6.7bn), and used it to argue against a new tax now entering Denmark’s legislative process.
The lobby group said the government should reconsider its planned special financial tax to pay for the new early-retirement pension, in the light of this PAL tax figure. A bill on the social contribution, which introduces the special tax, is due to be presented in the next few days, said the association, which has long opposed the idea.
Kent Damsgaard, IPD’s chief executive officer, said: “I hope that the record contribution from the pension tax here gives a reason to really reconsider the sense in imposing an extra tax on our members and Danish insurance and pension customers.”
IPD said the last time the previous record for state revenue from the PAL tax from its members in 2019, when the sum reached DKK38bn. The association pointed out these figures were only for PAL paid by its members, and that across the whole pension sector they were higher when ATP, LD Pensions and banks were included.
Damsgaard said the PAL contribution from IPD’s members alone was more than DKK14bn greater than the total revenue generated from the tax as estimated in the 2022 national budget and the December 2021 financial statement.
“In many ways, our pension schemes have taken over the role that the North Sea once played in the national economy,” he said.
Though few people may have been aware of the PAL tax, it had “enormous significance” as a contribution to the financing of Denmark’s society and welfare, the CEO said.
The organisation spoke out in November about the introduction of the early-retirement tax, saying that, according to a rough draft proposal, the levy to pay for it would be much heavier than needed to finance the 2020 early-retirement pension reform.
IPD suggested at the time that the introduction of digital cash registers designed to improve tax compliance should be pushed forward in Denmark to help finance the early-retirement pension, with income from the fight against VAT and tax fraud being used to a greater extent.