PFA economist predicts Danes will pay record amount into pensions this year

Danish savers are expected to pay a record amount into their pension pots this year, according to PFA economist, Carsten Holdum.

He believes this will happen due to the amount of additional money sitting in Danish people’s bank accounts, which was DKK 1,022bn in September 2021. This is the sixth-highest level ever and also coincides with banks implementing negative interest rates on deposits.

"Right now, we are seeing a lot of people logging into their pensions. The increase in the negative interest rates and the plentiful bank accounts gives many Danes good reason to consider paying extra money into their pensions. I expect the extra payments to be at a record high level this year,” Holdum stated.

He said extra pension contributions made when working can also give people more freedom to choose how and when they retire. “Danes increasingly want a so-called flexible withdrawal from the labour market,” he said.

Those that want to make an extra payment into their pension before the new year must make a fixed pension payment through their employer. The cut-off date is 14 November.

He also adds that it is especially advantageous for everyone who pays the top tax level to take advantage of the extra tax assessment deduction for contributions to pensions, which was introduced with the pension reform in 2018. The deduction applies in 2021 to contributions up to DKK 74,700.

For those up to 15 years from the national retirement age, the deduction is 32 per cent, for those more than 15 years from the retirement age, the deduction is 12 per cent.

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