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Danish government unveils major new early retirement plan

A new pensions model unveiled by the Danish government on Tuesday could enable as many as 38,000 people to take early retirement by 2022, the government said.

Published: 18 August 2020 16:40 CEST

Danish government unveils major new early retirement plan

PM Mette Frederiksen presents the new pensions plan. Photo: Henning Bagger/Ritzau Scanpix

The figure is expected increase to 49,000 by 2025, the governing Social Democratic party said at a press conference. As many as 22,000 of the 38,000 are expected to take the opportunity to retire early.

The pensions reform is aimed at people in physically-demanding jobs who are approaching retirement age, and has been a central part of Social Democrat policy since the 2019 general election campaign.

“You should be able to stop working before you are worn down,” Prime Minister Mette Frederiksen said.

“Pension life should be good. It should mean some good years with time to pursue your interests and be with your family. It should be a right,” she said.

The government proposal for the right to early pension applies to persons who have been on the labour market for at least 42 years by the time they reach the age of 61.

Included in the proposal is a ‘staircase’ model which allows pension to be taken 1 year early after 42 years of working, 2 years early after 43 years, and 3 years early after 44 years.

The pension will be 13,550 kroner monthly before tax, with the option of earning 24,000 kroner tax-free annually.

The pension, which can be supplemented with payouts from private pensions, is reduced for individuals with private pensions of over 2 million kroner.

Three billion kroner annually will be budgeted for the pension, according to the proposal.

Denmark’s current retirement age is 66 years, but it is scheduled to be gradually increased in the coming years.

READ ALSO: Working in Denmark? Here's what you need to know about pensions

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Pension reform, investment, new jobs - Macron unveils France's post-Covid recovery plan

A nurse watches Macron's TV address on Monday. Photo: JEAN-FRANCOIS MONIER / AFP.

Obligatory vaccines and the extension of the health pass made the headlines following Macron’s live TV address on Monday evening, but the President also sketched out his vision for France’s post-Covid economy.

Some of the measures he announced represent a return to the priorities he set at the beginning of his tenure, while others have been shaped by the pandemic.

Pension reform

There had been much speculation about a return of controversial plans to reform France’s retirement system, which were shelved at the start of the pandemic.

Macron confirmed that he planned to raise the retirement age – most people can currently retire at 62, but a number of ministers have been pushing to raise the legal minimum to 64.

READ ALSO France to tackle fourth Covid wave with stricter border controls, health passports and compulsory vaccines

“Because we are living longer, we will have to work longer, and retire later,” Macron said. “Not tomorrow, not brutally, and not in a uniform way because we will take the difficulty of a job into consideration.”

The government will begin consultations with workers and employers in September, but “will not undertake the reform so long as the epidemic is not under control and the recovery guaranteed,” Macron said.

This could mean his plans are not implemented before the presidential election in April 2022.

Macron also returned to a controversial point from the 2019 reform plan which lead to widespread protests: the abolition of the country’s 42 different pension regimes, which currently mean many public-sector workers can retire early. Under the new plans, these special regimes will be abolished for new employees, but people currently employed can keep the generous exceptions.

EXPLAINED: What are France’s special pension regimes?

The plan also includes a minimum pension of €1,000 per month after a full career. “A life of work must offer a dignified pension,” Macron said.

Unemployment reform

Changes to unemployment benefits will be “fully implemented” on October 1st. The reform was supposed to come into effect on July 1st, but in June, France’s Council of State decided to suspend certain elements regarding the way benefits are calculated.

“Uncertainties around the economic situation do not allow for implementing, at this moment, these new rules which are meant to support job stability by making benefits less attractive for workers alternating between short contracts and inactivity,” that decision stated.

“In France, you must earn a better living by working than by staying at home, which is currently not always the case,” Macron said on Tuesday.

From September, the government will also launch “a massive plan for the training and retraining of the long-term unemployed”.

“We have seen during this crisis the strength of our social model,” Macron said. “It’s a jewel we need to preserve. This social model rests on one foundation: work.”

Investment plan

During his address, Macron also emphasised the importance of economic sovereignty, and said an investment plan would be unveiled in the autumn following consultations this summer. The objective is “to build the France of 2030”, and to “reindustrialise, reconcile growth with ecological production”.

“We saw during this crisis the consequences of dependence,” Macron said, calling for French and European independence with regards to technology and primary resources.

Last month, the President announced a series of measures designed to stimulate French innovation in healthcare technology.

Support for young and old

Finally, Macron announced additional support for those who have been hardest hit by the pandemic – young people “who sacrificed so much even though there was little risk for themselves”, and elderly people “who more than others feared for their lives”.

In September, the government will unveil a new revenu d’engagement (commitment-based income) for young people not in education, employment or training. This “will be founded on rights and responsibilities”. This could resemble the garantie jeunes, a monthly benefit for 16 to 25-year-olds not in employment or training, created under François Hollande’s government.

For the older generation, Macron avoided specifics. “We owe them a great humanist ambition for independence, strengthened home care, modernised retirement homes,” he said.

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