Denmark’s biggest commercial pension fund said more of its scheme members are now making extra pension contributions than ever before, as measures to tackle the COVID-19 pandemic leave Danes with fewer options to spend their cash.

PFA Pension, which manages DKK599bn (€80.5bn) of assets, said that in the third quarter of this year, 18.1% of its customers had made extra payments into their pension plans, and that this was the highest level ever.

In the first quarter of 2020, that proportion was 17.1%, the mutual firm said.

Carsten Holdum, consumer economist at PFA, said: “During the six months of the coronavirus, we have seen a large increase in the number of customers who are making an extra ongoing contribution to pensions.”

For several years, now, he said there had been a trend for Danes to increase their savings not only in the form of pensions but also as cash deposits in banks and in mortgage payments.

Figures from Statistics Denmark recently showed that savings were now at record levels as a result of a historical decline in consumption, he said.

At the end of September, the statistics agency reported a 6.2% fall in private consumption in the second quarter, saying the lockdown had hit the retail sector in particular with clothing sales in heavy retreat.

“The fact that we are now saving up more than ever – not just for retirement, but in general – is of course happening against a gloomy background, as it is at the expense of consumption,” Holdum said.

However, there were benefits for the individual, he said, with money in the bank giving people something to fall back on if they were to lose their job, he added.

“And with Denmark having the world’s highest per capita pension savings, and more and more people now paying in extra, in the long run it means a big proportion of the population can look forward to a reasonable income in retirement, and an economy that is robust and sustainable in the long run, when the share of older people will increase sharply,” Holdum said.

He said it would be interesting to see how much of the holiday allowance cash now being released to individuals by the Danish government would in fact go into extra pension savings.

“A double-digit billion sum is being released in the hope that we will increase our consumption and so support employment in the short term. But from experience, part of that will go to consumption and part will go into savings,” he continued.

Danish employees were given an extra year’s holiday allowance money in 2020 as a result of a change in the holiday accrual law.

The money, totalling around DKK100bn, is being channeled into a special pension fund managed by LD Pensions, but because of the pandemic, politicians voted to pay three fifths of the money out early.

Holdum said that people who wanted to save could either leave the money in the holiday fund (LD Feriemidler) or withdraw it and deposit it into their own savings, while some may need it to repay debt.

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