Danish political parties agreed yesterday to give employees access to the remaining two weeks-worth of holiday allowances, which were originally to be managed by LD Pensions until their retirement.
The decision, aimed at providing the pandemic-hit economy with more consumer demand, means LD Pensions will be left with only a small fraction of the holiday allowances fund, Lønmodtagernes Feriemidler, to manage.
The Ministry of Employment announced on Wednesday that an agreement had been reached between the government, the Liberal Party, the Radical Left, the Socialist People’s Party, the Unity List, the Conservative People’s Party and the Alternative to let the remaining frozen holiday pay be paid out.
Minister for Employment Peter Hummelgaard said: “I am glad that an agreement has now been reached that can contribute to increasing Danes’ consumption.”
More than two million citizens had already been paid part of the frozen holiday pay, he said, adding that he hoped there would be just as much interest in withdrawing the remaining money.
“This is needed because of the coronavirus, which has affected business segments,” he said.
Because the agreement was aimed at boosting the Danish economy, Hummelgaard said he was appealing once again for people to use the holiday money locally, so it could benefit Danish companies and shops.
The decision follows the agreement struck by the politicians in June to disburse three of the five weeks of holiday allowances held in the fund.
This has resulted in DKK51.6bn of the fund being paid out.
According to LD Pensions, a significant minority of people with money in the holiday allowances fund have so far waived their right to withdraw the three weeks of allowances released in the first phase of payouts.
“In connection with the autumn payouts, up to 700,000 employees chose to leave their money in Lønmodtagernes Feriemidler, which is managed by LD Pensions,” the firm said on Wednesday.
Employees in Denmark will be able to apply for their final payouts from the holiday fund from March 2021, the ministry said, which it said was the earliest possible point at which allowances could be calculated and paid out.
Employees who have not withdrawn any of their holiday pay so far will be able to withdraw up to five weeks’ holiday pay in one go, the ministry said.
If people decide not to withdraw the frozen holiday pay, it will remain in the LD Funds, the ministry said.
Back in 2017 when Lønmodtagernes Feriemidler was established, it was envisioned that LD Pensions would manage DKK100bn of assets in the fund.
LD Pensions (LD Fonde) also manages another pension fund, Lønmodtagernes Dyrtidsmidler, whose assets stem from cost-of-living allowances granted to workers at the end of the 1970s.