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PENSIONS

Who can apply for Denmark’s ‘Arne pension’ early retirement?

A rule introduced in August 2021 enables long-term members of the Danish labour market to apply for early retirement.

Published: 22 June 2022 14:04 CEST
Who can apply for Denmark’s 'Arne pension' early retirement?
Arne Juhl, who became the face of the government's early retirement scheme, embraces Prime Minister Mette Frederiksen at a Social Democratic conference in 2019. Photo: Henning Bagger/Ritzau Scanpix

The early retirement scheme, commonly known as the “Arne pension”, was a prominent part of the Social Democratic party’s campaign platform when it was elected in 2019.

Since it was formally introduced last year, 37,700 people have already been granted an early pension under the new rules, Employment Ministry figures, released on Wednesday, reveal.

More than 50,200 people have submitted applications for the new ‘Arne pensions’ since August last year. 

The scheme allows people aged 61 or older who have spent more than 42 years in the labour market to retire before the age of 67, which is the current age to draw Denmark’s state pension, folkepension. 

Workers who have logged 44 years in the labour market by the age of 61 can retire three years ahead of schedule, while 42 and 43 years earn you a one- or two-year advance, respectively. 

The age at which the early retirement can be taken will, however, increase in years to come, alongside the general retirement age, which is also scheduled to increase.

People born from 1965 onwards will be able to apply for the early pension at 62, while that increases to 63 for people born from 1969 onwards. The number of years needed on the labour market to qualify increases concurrently.

Graphic: borger.dk

“We are both pleased and proud that we have created a scheme which allows people who have had a long and tough working life to step back before they get too sick or are so worn down by the labour market that they have no choice,” Employment Minister Peter Hummelgaard told news wire Ritzau.

The Social Democrats announced a proposal to introduce an early retirement scheme a part of the party’s 2019 general election platform. In the campaign, a picture of brewery worker Arne Juhl was used along with the text Nu er det Arnes tur (“It’s Arne’s turn now”). The early pension scheme subsequently became known as the “Arne pension”.

The scheme is not popular across the board. Conservative party leader Søren Pape Poulsen has called is “pure socialism”, while conservative parties have also criticised it for reducing the labour force at a time of shortage.

Early retirement should be based on individual assessment, according to critics.

People in the building and abattoir sectors are among those who have used the scheme most, according to Ritzau.

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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.

Published: 19 January 2024 12:53 CET
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.
 
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