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Retirement in Denmark: The pensions system explained

Denmark has various different types of pension, including an obligatory state pension and private options.

Published: 22 October 2021 18:31 CEST
Updated: 30 October 2021 09:15 CEST
If you plan to spend most of your working life in Denmark, it pays to plan your pension form an early stage.
If you plan to spend most of your working life in Denmark, it pays to plan your pension form an early stage. Photo by Katarzyna Grabowska on Unsplash

If you work for a company in Denmark, you may already be on a private plan provided by your employer. You could also be paying directly into a labour market pension – contributions for this are shown on your payslip.

Meanwhile, the Danish state provides a pension to its residents, which is not related to employment.

The Danish pension system is based around three main types. By logging into Pensionsinfo using your secure login (NemId at the time of writing, soon to be replaced by MitID), you can easily check the status of all you pensions.

State sponsored pension (folkepension)

The folkepension is state-provided and not related to your employment. 

To qualify for the basic state-sponsored folkepension, you must have a permanent address in Denmark, have live in Denmark for at least three years between your 15th birthday and retirement age, and be a Danish citizen.

If you are not a Danish citizen, however, you still qualify for this pension if you have lived in Denmark for at least 10 years between the age of 15 and retirement age. Citizens of EU and EEA countries and Switzerland, as well as the United Kingdom, qualify without Danish citizenship, as do some refugees.

If you have lived and worked abroad, you can still qualify for the Danish pension, but the amount you will receive is affected by factors including how many years you worked abroad and how many years you have lived in Denmark. If you are entitled to state pensions from other countries, the periods for which you qualify for the foreign pension will not be eligible for the Danish pension.

Because of a 2017 law change, the age at which you can retire and take out a folkepension depends on when you were born, with the retirement age scheduled to increase incrementally in coming years.

People born after 1966 will be able to retire when they are 69 years old, while those born before 1954 can retire aged 65.

You can see the relevant breakdown of retirement ages here.

Denmark also allows you to delay withdrawing your pension. This enables you to earn a venteprocent or ‘waiting percentage’, increasing the monthly payout when you do withdraw it. You apply for this via the borger.dk website.

The state pension consists of a basic element (grundbeløb), which everybody gets, and a supplement (pensionstillæg), which is adjusted according to whether you live alone or with a spouse or partner.

The state pension can also be adjusted downwards if income from the two other types of pension is higher.

ATP (Arbejdsmarkedets Tillægspension)

ATP pensions are a supplementary labour market pension scheme which nearly everyone in Denmark pays into. Deductions are automatically taken out of your paycheck – you can see them on your pay slips. 

You only pay a third of your ATP pension contribution while working – you employer pays the other two thirds.

You can read in detail (in Danish) about tariffs, deductions and other factors which determine the ATP pension payout here.

READ ALSO: EXPLAINED: How to understand your Danish payslip

Your ATP pension will be automatically paid into your current account or NemKonto when you reach retirement age. The amount you receive depends on how much you have paid in through the course of your working life, and also when you paid it – earlier deposits result in higher pension payouts.

You can check how much ATP pension you can expect to receive at any time by logging into to your account via borger.dk.

Private or individual pension

Anyone in Denmark can join a private pension scheme, and if your company offers a private pension programme, then you will also see line items on your pay slips for employer and employee contributions. 

There are a range of different companies and pension options which you can choose to pay into individually, and you should carefully consider which best suits you.

For those discussing private options with an employer, you and your advisor will consider personal and family situation and how comfortable you are with the various options before making a final decision.

If you think that you will leave Denmark before you retire, you should mention this to your pension advisor to discuss your options. You will generally be able to take the pension with you, but you will have to pay high taxes if you take the money before retirement age.

Source: borger.dk

READ ALSO: Feriepenge: Denmark’s vacation pay rules explained

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MONEY

REVEALED: Your money-saving tips for life in Denmark

Denmark is famously one of Europe's most expensive countries, so we asked our readers in the Nordic nation for their top Danish savings tips.

Published: 26 January 2024 17:03 CET
REVEALED: Your money-saving tips for life in Denmark

Denmark was named as the most expensive European Union country for basic goods and services in 2022, along with Ireland. Data from the EU’s statistics agency Eurostat showed that price levels in Denmark were 40 per cent higher than the EU average.

For consumer goods and services, Denmark had the highest prices of all EU member countries, coming in at 49 percent above the EU average.
 

As many as 90 percent of our readers surveyed said that Denmark is an expensive country to live in but had many money-saving tips to share.

 
“Use Earlybird for booking restaurants…the Tilbudsavis app to find discounts on groceries, buy coffee capsules online, never pay for electricity Aconto – settle only for actual consumption, get a prepaid phone plan from Lycamobile or Lebara as it’s best value for money,” 31-year old Ivan in Copenhagen suggested.
 

Cooking at home and avoiding eating out was a popular suggestion from many readers. They also recommended researching online before buying expensive products and to check discounts in supermarkets.

 
37-year old Magda based in Copenhagen said, “Use the minetilbud app so you can buy øko [organic, ed.] products for lower prices, buy discounted products in a larger amount and store them, buy good quality bread or øko meat/fish with a short expiration date and freeze it…grow your own vegetables, use the Too Good To Go app.”
 
Reader Kevin added, “I buy bulk goods when they are on sale and then freeze them for later.”
 
Money-saving tips also included using the commuter discount card Pendlerkort for public transport and car-sharing or renting a car instead of buying.
 
One reader said, “For public transportation, check company card options with your employer. For insurances, check your employer schemes and do your research online with comparison tools. For car insurance, consider joining a motorist association as they offer much cheaper car insurance plus other benefits. There is little sense in buying new or large cars as they are excessively expensive.”
 
 
For those with children, it was recommended to buy annual membership cards to zoos, museums and amusement parks if you will visit at least twice a year.
 
“Buy second hand stuff especially for babies and small children and check out libraries or cultural centres for events, especially for kids as they are often free,” one reader said.
 

Petra, from the Czech Republic and living in Aarhus said, “use second hand apps and shops, circular economy apps like Reshopper, or apps selling close to sell-by-date foods like Too Good To Go.”

 
There were several suggestions from our readers to travel out of Denmark to buy certain goods and services. 
 
“Travel to Malmö and do a huge shop there and buy goods in Germany or Sweden, while on trips,” Scott, aged 67 and living in Copenhagen advised.
 
32-year old Hanna, based in Copenhagen said she got all her beauty procedures done abroad.
 
“Find psychologists, teachers, and even personal trainers abroad. Buy vitamins and basic medications in German online pharmacies,” she added.
 
 
Some 92 percent (34 out of 37) of our readers in the survey said the expense of Denmark had changed the way they live, compared to other countries. Many noted how they don’t go out to eat and drink as much, or to the cinema or theatre. Others said a lot of their money went on bills and rent, leaving less to spend on leisure activities.
 
A much lower proportion, 38 percent said they would consider moving away from Denmark because of how expensive it is. 
 
Items people found particularly expensive in Denmark included rent, property, food, especially healthy food and sweets, alcohol, coffee shops, clothing, the price of spectacles, eating out, cinema and theatre, family trips out for example the zoo, museums, public transport and taxis, petrol, cars, dry cleaning, hairdressers, spa treatments, handyman services, and electricians.
 
The items our readers found cheaper in Denmark compared to other countries were education, healthcare, internet and mobiles, car insurance, long-distance bus journeys, bikes, some food (such as rye bread), clothing, houses outside of city centres and even real estate in Copenhagen relative to other European capitals.
 
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