DENMARK - Big increases in pension saving in Denmark since 1995 have not been the reason for the growth in indebtedness among the country's population, despite having been previously blamed for the rise, the pensions industry association said.
Forsikring & Pension (F&P) said the Danish central bank's latest quarterly report confirms pension savings were not the cause of Danish household debt.
The association said a new analysis it had done showed it was the housing market and not pension savings that caused Danish household debt to rise sharply between 1995 and 2009 - a period of strong accumulation for labour market pensions.
This study, it said, confirmed the latest findings of the central bank.
Carsten Andersen, deputy director at the F&P, said: "Our analysis clearly shows it is the development of the housing market that is the reason for the high gross debt.
"And it is gratifying that the central bank has reached the same conclusion - that there is no correlation between Danish pensions increased since the early 1990s and the growth in debt."
The study showed that people with high pension contributions had actually increased gross debt less than people with low savings.
Andersen said this would make it clear once again that retirement savings were unequivocally good for Denmark.
"It is because of pension savings that the build-up of families' gross debt could happen while external debt was turned into foreign assets," he said.
According to the F&P study, gross debt of homeowners grew to almost 400% of disposable income in 2009 from approximately 250% in 1995.
For tenants, on the other hand, the debt ratio had increased from just over 50% in 1995 to about 80% in 2009.
On publication of the central bank's second-quarter report, governor Nils Bernstein acknowledged that Danish household debt as a ratio of income was very high compared with other countries.
However, he noted that the financial sector's losses on households had been moderate so far, mainly because private individuals with large debts also had large assets such as pension savings, shares and bonds and homes.