A large majority of Danes (79 per cent) believe that it should be possible to pause payments from instalment pensions, according to research from Sampension.

Under the current rules, instalment pensions cannot be stopped once payments begin, unlike lifetime retirement pensions, which can have payouts halted.

Commenting on the research, which was conducted among approximately 1,000 Danes, Sampension said the findings pointed to a clear public appetite for reforms that would make it easier for people who regretted retiring or whose circumstances changed to re-enter the workforce without facing a financial penalty.

Indeed, Sampension customer director, Christian Due, highlighted that Danes were increasingly postponing retirement, which has been supported politically by making it more financially attractive to remain in the labour market.

The Danish parliament recently published a bill to make it more financially attractive for Danes who have passed the state pension age to work in the future by increasing the tax-free senior premium, which Danes receive if they work in the first and second year after retirement age and are employed for at least 1,560 hours per year.

This followed the average retirement age for Danish employees reaching a new milestone in the fourth quarter of 2024, when it hit 67 years for the first time, according to estimates from Insurance and Pension Denmark (I&P Denmark).

However, Due warned that there were still rules that worked in the opposite direction of this trend.

“We know that many Danes would like to return to work but are held back because they have started receiving instalment pension payments and cannot pause them,” he added.

Due argued that the lack of flexibility affected individuals directly but also carried broader economic implications, particularly given expectations of labour shortages in the years ahead.

“This lack of flexibility primarily affects the individual, who is unable to work in retirement without being financially penalised," he explained.

“But it can also have a major impact on society more generally when retirees encounter barriers that make it more difficult to return to the labour market”.

Indeed, previous research from Sampension found that the vast majority (87 per cent) of Danes agreed that longer retirements required increased incentives to save.

With this in mind, Sampension concluded that introducing the ability to pause instalment pension payouts would align the product with lifetime pensions and offer retirees greater control over their retirement trajectory.

“From a political perspective, it is obvious that it should be made possible to pause payments from instalment pensions, just as is the case with lifelong pensions,” Due stressed.

“This will give current and future pensioners greater flexibility, strengthen incentives to be employed in retirement, and contribute to even more Danes choosing to work after they have passed retirement age,” he emphasised.

Echoing this, the Danish Pension Commission previously recommended enabling instalment pension pauses, arguing that such a change would “contribute to increased flexibility, including the possibility of undoing retirement and returning to the labour market.”

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