Funding proposition to allow Danes early retirement is ‘unfortunate’ – Insurance and Pension Denmark

The Danish government’s proposal to finance a pension reform that would allow thousands of citizens to retire early has been described as “unfortunate” by Insurance and Pension Denmark.

The government set out its reform yesterday, 18 August, which will allow those aged 61 who have spent between 42 and 44 years in the labour market to retire early. The government expects this to amount to 38,000 people by 2022 and is set to cost DKK 3bn.

It is proposed that the reform will be half funded by a special tax on the financial sector from 2023, which also affects the insurance and pension industries. Insurance and Pension Denmark believes that this is “unfortunate” and will become expensive for the individual Dane.

Insurance and Pension Denmark deputy director, Jan V Hansen said: “In the insurance and pension industries, our economic social contribution is already large, and in our part of the financial sector we do our utmost to comply with the social contract and pay close to DKK 30bn in taxes and charges annually to a joint fund. Therefore, we think it is wrong that we should be subject to such a special tax.”

He added that the proposal could end up being “expensive for ordinary Danes” if it becomes a reality. “The tax will reduce the individual's pension, it will be more expensive to buy insurance for the individual, and the possibilities of investing Danish pension savings e.g. in the green transition will deteriorate,” he stated.

The motivation behind the reform is to address imbalances from a previous pension reform in 2006, which saw the retirement age increase to 67. Prime Minister Mette Frederiksen told a press conference that the reform will address a “great injustice” in the labour market.

However, before the new rule can be introduced the minority government will have to negotiate with other political parties.

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