Three quarters of Danish people are not aware that it can be financially beneficial to have their instalment pension paid out over a period longer than 10 years, a study from Sampension has found.

The pension company stated that several hundred thousand Danish kroner can be gained in retirement if the instalment pension is paid out over more than 10 years.

For most Danes, the instalment pension is paid out for the first 10 years after retirement, but many could see financial gain if they stretched payments over a longer period.

This would result in smaller annual pension payments, therefore giving the pensioner an increased supplementary old-age pension.

According to Sampension, if an instalment pension of DKK 2.5m had its payments extended from 10 to 20 years, this would add around DKK 300,000 to overall pension income.

The survey, carried out by Epinion, found that just 23 per cent of Danes knew of the financial benefits of extending payouts, while 77 per cent did not.

However, when looking at those closer to retirement (aged 56-65), 39 per cent were aware of the financial advantage of extending the payment period for an instalment pension.

“There is every reason to have a plan in place for how to get the most out of your pension savings when the time comes,” said Sampension head of advisory, Helle Dalsgaard.

“Because just by planning your pension finances well in advance, you can ensure that you have significantly more to do well in retirement - without paying a single krone extra into your savings.

“For example, for many people, there can be a significant financial benefit to be gained by extending the payouts from an instalment pension over a longer period than the 10 years that it is typically set for.

“The advantage is that when you extend the instalment pension payments, the annual payments will be smaller, and thus you will be more entitled to the supplementary amount of the old-age pension.

“However, you must also be aware that if you choose to have the instalment pension paid out over, for example, 20 years rather than 10 years, the annual pension will be smaller in the first 10 years.”

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