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PENSIONS

Danish government drops plan to increase retirement age

Denmark’s prime minister Lars Løkke Rasmussen announced Monday that plans to increase the country’s retirement age would be dropped after conceding parliamentary majority is unobtainable.

Published: 22 May 2017 15:56 CEST
Danish government drops plan to increase retirement age
Prime Minister Lars Løkke Rasmussen. Photo: Nikolai Linares/Scanpix

The minimum age for Danes to draw pensions had been slated for a six-month increase from the current age of 67 to 67.5 years.

But the coalition government has now withdrawn plans to go through with the proposal in the absence of an overall parliamentary majority in support of the plan, the PM told broadcaster DR.

“A broad majority, including the [opposition, ed.] Social Democrats and the Danish People’s Party has already decided that the minimum pension age should increase gradually as Danes live longer. Today we are living for longer than we expected, and at the same time we are short of available workers. It would therefore make sense to adjust the proposal, creating more equality between generations and securing our progress and well-being,” Rasmussen said.

But the PM said that the planned inclusion of the proposal in a new package of employment reforms to be presented by the government next week would now not include an increase to the minimum pension age.

The reforms will still include provisions making it easier to continue working beyond the current retirement age of 67, while not making any change to the eligibility age for the state pension.

Opposition to the now-dropped plan to increase the retirement age came from the Danish parliament’s two biggest parties, the opposition Social Democrats and the populist Danish People’s Party (DF), which has remained outside of Denmark’s centre-right coalition despite increasing its parliamentary share in consecutive elections.

The leaders of the two parties announced in a double interview with union magazine Fagbladet 3F earlier this year that they would not support an increase to the minimum pension age, thereby giving the government an uphill task to secure a majority for the proposal.

“This is a very good piece of news from the prime minister… DF has fought against further raising the retirement age, and the government has now realised it will be very difficult to get through parliament, and is therefore dropping the proposal. So it’s really good news,” said DF party leader Kristian Thulesen Dahl to DR.

Social Democrat spokesperson Nicolai Wammen echoed the comments of Dahl.

“It is gratifying that Lars Løkke is now throwing in the towel and finally admitting that there is no support, either in parliament or amongst the population, for the government’s plan for later retirement,” Wammen told DR.

“It is far more constructive to look at how we can ensure that seniors who are fresh enough, fit enough and good enough physically can remain in the employment sector,” Dahl added.

READ ALSO: Denmark to do away with forced retirement

But the Social Liberal (Radikale Venstre) party called Løkke “historically weak” after the forced pensions climbdown.

“Even though Venstre, Liberal Alliance and the Conservatives are sitting in government, it’s apparently Kristian Thulesen Dahl doing the governing. This is a complete belly flop for the government’s economic policies, and we are dealing with a government that is living on pretences,” Social Liberal leader Morten Østergaard, whose centre-left party supports increasing the retirement age, said to DR.

Østergaard said that Rasmussen was one of the “weakest prime ministers in the history of Denmark” in reference to the government's inability to push through any policies opposed by the two parties in parliament – the Social Democrats and DF – that have more MPs than Rasmussen's own Venstre (Liberal) party.

Rasmussen has stated several times his own wish to increase Denmark’s retirement age, citing a faster-than-expected uptick to life expectancy in the country.

“The increasing challenge facing us in the coming years is that many will be drawing pensions while fewer will be on the job market relative to our expectations. We therefore propose to adjust the pension age… so those that are able to can work for a half year more,” he said at a press meeting in August 2016.

The proposal also survived a government reshuffle as the Liberal Alliance and Conservative parties joined Rasmussen’s Venstre party in coalition in November.

Although parliament agreed that the retirement age should be raised in sync with longer life expectancies as long ago as 2006, life expectancies have since increased even more than expected, reports DR.

The government’s target is for pensions to provide for an average of 14.5 years of life per citizen.

For members

COST OF LIVING

EXPLAINED: How Americans can retire in Switzerland

A tranquil, peaceful and safe country, Switzerland's appeal is undeniable. Here's how Americans can retire in Switzerland.

Published: 18 October 2021 16:00 CEST
Updated: 11 January 2022 14:54 CET
Two people hold up their American passports in a European town square
While it is not easy for Americans to retire in Switzerland, it is fortunately not impossible. Here's what you need to know. Photo by Spencer Davis from Pexels

With clean streets, tranquil vibes and low crime rates, Switzerland is a perfect place to retire. 

People from across the world have flocked to Switzerland to spend their later years, with American singer Tina Turner, Canadian singer Shania Twain, British musician Phil Collins and Swedish businessman Ingvar Kamprad – of IKEA fame – among the many who have all chosen to spend their twilight years in the alpine nation. 

For Americans – or indeed anyone – looking to retire in Switzerland, the good news is you don’t need to be world famous in order to do so. 

You will however need to jump through a few hoops. 

The rules for retiring differ on the basis of whether you are from an EU/EFTA state or not, with the US, UK, Australia, India and Israel being some of the many examples of ‘third countries’. 

If you are not American, click the following link for information on how to retire in Switzerland. 

READ MORE: Everything you need to know about retiring in Switzerland

Here’s what you need to know. 

How can Americans retire in Switzerland

There are two broad categories of Americans wanting to retire in Switzerland: those who already live here with valid working permits – and those who still live in the United States. 

If you worked or are working in Switzerland on a valid residence permit, retirement is unlikely to be difficult at all. 

Switzerland has a retirement age of 65 for men and for women. The retirement age for women was raised from 64 to 65 in June 2021. 

If you fit into this category, then please check our our extensive guide on pensions in Switzerland. 

EXPLAINED: How does the Swiss pension system work – and how much will I receive?

But if you currently do not live in Switzerland/have a Swiss residence permit and would like to retire here, this is still possible. 

How can non-residents including Americans retire in Switzerland? 

In order to be granted a visa to retire in Switzerland, you need to have: 

  • Adequate financial resources and proof you will not look for work in Switzerland;
  • A close connection with Switzerland;
  • You must have Swiss health and accident coverage.

These points are dealt with individually below. 

How does the process work?

If you come from outside the EU / EFTA, you must apply for a visa with a Swiss diplomatic/consular mission in your country of residence, i.e. in the United States. 

First, they will check that you don’t have any criminal records.

You must be 55 years of age or older to move to Switzerland from abroad in order to retire. The Swiss retirement age is 65. 

You will need to demonstrate a close link to Switzerland.

This can be past residency, family ties or even frequent holidays in Switzerland can suffice as evidence of a close connection. 

Real estate can be a factor, although keep in mind that owning property in Switzerland is no guarantee of a close connection. 

Reader question: Does owning a second home in Switzerland give me the right to live there?

Also, in order to be considered, you must prove that you have enough financial resources to live in Switzerland without having to work or claim welfare benefits.

You do not have to transfer the bulk of your financial interests to Switzerland, although this is likely to help illustrate that you have enough financial resources to move there. 

You can transfer your pension to Switzerland provided there’s a bilateral arrangement with your country of origin. More information is available here. 

READ MORE: How to get a visa to retire in Switzerland

The eventual decision is made by cantonal authorities and is often highly discretionary.

Tina Turner, who has lived in Château Algonquin in Küsnacht, Zurich, since 1994, is perhaps the most prominent American who has retired in Switzerland. 

While speaking a Swiss language is a pre-requisite of citizenship, as with plenty of other things, the authorities appear willing to make exceptions when the price is right or when you’re the honorary mayor of Nutbush City.

Turner gave up her American citizenship in 2013 and became a Swiss citizen, despite not speaking German, French or Italian.

Which brings us to…

Money helps grease the wheels

A little-known article of the Swiss law — Article 30 of the Federal Aliens Act — allows wealthy foreigners from outside Europe to move to Switzerland.

Cantons can issue residence permits B to these people, if local authorities deem that there is a “significant fiscal interest” in such a move.

Golden visas: Everything you need to know about ‘buying’ Swiss residency

What exactly does “significant fiscal interest mean?” 

This term is defined by each canton.

For instance, the lowest annual tax rate for a non-EU foreigner is 287,882 francs in Valais, 312,522 francs in Geneva, and 415,000 Vaud. 

Every year, around 40 to 50 people ‘buy’ their way into Switzerland this way, as reported by TagesAnzeiger, which used the numbers published by the State Secretariat for Migration (SEM).

How much should you save for a ‘comfortable’ retirement in Switzerland?

To maintain the usual standard of living during retirement, residents of Switzerland need more savings nowadays than four years ago, according to an analysis by UBS bank, which compared the pension systems of 24 countries.

In 2017, the last time UBS conducted a similar study, that number was 11 percent.

The new UBS International Pension Gap Index found that “the Swiss pension system still enjoys a high reputation. However, contrary to other countries, it is more difficult to push through urgently needed reforms to ensure this reputation will last”.

Click the following link for more information

READ MORE: How much should you save to retire in Switzerland?

Please note: As with all of our explainers, they are intended as a guide only and do not constitute legal or financial advice. Please discuss any financial decisions with a certified expert in the field. 

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