SHARE
COPY LINK

PENSIONS

Could Denmark delay plan to increase retirement age?

A Danish commission said on Tuesday it thinks the country’s planned increase to the retirement age should be slowed.

Could Denmark delay plan to increase retirement age?
Many European countries are increasing retirement age as population grows older. (Photo by CDC on Unsplash)

Recommendations from the government’s pension commission suggest changing the planned changes to the retirement age, at which residents of Denmark can begin to withdraw the country’s state folkepension. 

Under the advice of the commission, planned changes to the retirement age could be delayed such that people currently 18 years old may be able to retire two years earlier than they would under the current schedule.

The Pensions Commission on Wednesday presented its proposals for Denmark’s future pensions system.

According to broadcaster TV2, the commission wants to slow down planned changes to the retirement age from 2045 onwards.

The aim of the commission is to allow different generations to spend the same proportion of their lives as pensioners, in line with expected changes to life expectancy.

Previously, the aim of the retirement age plan was to result in the same number of years spent drawing the pension.

But the commission wants to change this so that retirement age becomes 80 percent of life expectancy.

Such a change in policy would cost the Danish state billions of kroner in increase spending on pensions, but is not expected to reduce the long-term stability of the economy.

80,000 fewer people would be on the labour market at the end of the century should the plan be changed in line with the recommendation, according to the commission.

READ ALSO: Why is the number of pensioners in Denmark decreasing?

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members

PENSIONS

How has Brexit affected pensions for Brits in Denmark?

If you are from the UK and considering a retirement in Denmark, there are some things to be aware of.

How has Brexit affected pensions for Brits in Denmark?

Moving from the U.K. to Denmark involves many more hurdles since Brexit came into affect on January 1st 2021. One of these involves pensions. 

Under HM Revenue and Customs rules, in order to open a new pension scheme, customers need to be a resident in the UK.

You can claim a State Pension abroad if you’ve paid enough UK National Insurance contributions to qualify. The payments can be made into your bank account abroad or into a UK bank account. 

However, since Brexit, some banks have started to close down their UK services to British citizens who live abroad. This means people have had to transfer their pension to the country they live in.

“In the UK, 25 percent of your pension is tax-free but in most countries it’s all taxable. So you might want to take it out before leaving the UK and then decide what you’ll do with the remainder,” Jason Porter, director at expat specialist financial adviser Blevins Franks, explained to The Local.

“Pretty much most banks prior to Brexit had been going through a consolidation, of withdrawing from European operations so closing down operations in European countries. Then came along Brexit, and it became a perfect storm for people who are living abroad. They need somewhere to receive money in the UK and it’s been quite difficult for a lot of them. Internet banks have filled the gap for many people,” Porter said.

READ MORE: REVEALED: Danish banks’ policies on non-Danish speaking customers

Private pension providers are less likely to offer cross-border services post-Brexit. This is because “passporting” rules that allow financial institutions to provide services across the EU have ended and instead they have to apply for a licence for each EU country.

“Some pensions only pay into UK bank accounts and that’s a difficulty for non-residents if there is no representation in the country they’ve moved to. Look at whether your pension scheme pays out abroad before you move,” Porter said.
 
If your pension does pay out abroad, you will have to include those pension payments in your Danish income tax assessment. When your tax is calculated, the tax you’re already paying on your pension from abroad, will be taken into consideration. If this is less than Danish tax then you will have to pay the difference. Those claiming pensions from the United Kingdom can apply online here.
You can still qualify for the Danish state pension if you have lived and worked abroad but the amount you will receive depends on how many years you have lived in Denmark. If you want to apply for a Danish pension and foreign pension, you need to contact the Danish agency responsible for paying out state pensions, Udbetaling Danmark.
 
 
The main advice from Jason Porter of Blevins Franks is to speak to someone about your pension before you’ve actually left the UK.
 
“Perhaps look at what you can do from restructuring. Can you transfer to a European pension scheme? Understand what your situation is going to be before you actually move because for some countries, getting the advice after moving can be too late to make adjustments,” he said.
 
SHOW COMMENTS