The Danish pensions industry is calling on legislators to make pensions in payment more flexible, saying more pensioners would then go back to work, while, in Sweden, a pension fund said the new flexible pensions law there benefits richer people rather than blue-collar workers.
Insurance & Pension Denmark (IPD) said: “IPD recommends it becoming possible to pause instalment pensions (ratepension) – then even more people will return to the labour market.”
The lobby group said new figures it compiled showed that every year, nearly 10,000 state pensioners or early retirement recipients chose to return to the labour market in Denmark after they had actually retired – a figure it said had been stable over the past decade.
Jan Hansen, pensions director at IPD, said: “It’s enormously positive that so many choose to contribute to the labour market again, even after beginning retirement.
“But it can be a disadvantage for these people that it’s not possible to stop the payments from the instalment pension again, if it’s once started,” he said, adding that this was unfortunate, both for them and society.
The association said the rules for instalment pensions were strict, and once payments had begun, they could not be paused, even though this was possible for payments from an annuity pension (livrentepension).
This meant people with both a salary and a pension payment risked being taxed at a higher rate and did not have the opportunity to save their instalment pension until they finally stopped working and then needed it more.
“Half of all state pensioners and early retirement recipients between the ages of 65 and 79 have an instalment pension,” Hansen added.
“The rule complicates the pension system and seems redundant, so let’s abolish it so that in future you can pause your instalment pension in line with annuities,” he said.
Meanwhile, AMF, Sweden’s main pension fund for blue-collar workers in the SAF-LO collective agreement, published the results of a new survey showing only 30% of private-sector manual workers saw it as likely they would work while receiving a pension.
This compared with 45% of regional and local public-sector employees and 40% of private-sector white-collar employees holding a similar view about working while receiving a pension, the SEK850bn (€75.3bn) pension fund stated.
Johan Holmer, author of AMF’s new report on the topic, including a survey carried out for AMF by Ipsos among 1,587 people, said: “In the discussion about becoming a ‘jobbonär’ [the Swedish popular term conflating “job” and “millionaire” to describe one who works and receives a pension], people often overlook the fact that a large proportion of people don’t have the opportunity to work during retirement.
“It isn’t surprising there are big differences between the collective agreement areas, since working life looks so different, with many people having worked on heavy tasks in working life and then tending to struggle to make it until retirement, and others still having energy left,” he said.
Sweden’s parliament last October approved a bill to make the payout of pensions more flexible, in order to facilitate more people working later in life. The new legislation, which took effect on 1 January this year, made it possible, inter alia, to pause payment of occupational pensions begun during the first five years.
Holmer said it was good that savers could now decide for themselves how much they wanted to withdraw from their pension, and adapt it to their situation.
“What you should keep in mind is that it is particularly relevant for those with high enough income to meet the ceiling for state income tax,” he said.
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