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Rules on pension an pensioning

How is your pension scheme composed, and what are your options? Which insurance policies come with the pension scheme? And what do you do when it is time to be pensioned off? Find answers to your questions about the pension scheme and pensioning.

How is your pension scheme composed, and what are your options? Which insurance policies come with the pension scheme? And what do you do when it is time to be pensioned off? Find answers to your questions about the pension scheme and pensioning.

Via the standard collective agreement, you are covered by a collective-based pension scheme for all employees at the company. In other words, your company must ensure that at least 16.50 % of your pensionable salary is paid into your pension scheme – of this, the company must pay at least 11.25 % and you must pay the rest, i.e. at most 5.25 %, which will be deducted from your salary. Furthermore, the scheme will give you the possibility to receive treatment at a private hospital and to receive compensation in case of critical illness or death.

If instead you are covered by the company collective agreement, a higher minimum contribution than 16.50 % and a lower employee contribution than 5.25% may be agreed. You can contact your union representative if you have questions about the company collective agreement.
If you are an insurance agent, the size of your pension contribution can be found in your local salary agreement.

Which scheme is right for you?

Your pension scheme must include both savings and risk cover.

The minimum requirements and options for individual selection of risk cover are agreed locally between your management and your professional representative, and similarly, these parties agree on the available options for placement of the savings.

Talk to your pension company concerning your options. You can always contact the company’s management, usually HR, or your professional representative if you need to learn about your pension agreement.

Can you say no to the risk cover?

The earliest you can deselect risk cover associated with your pension savings is when you reach pension disbursement age, i.e. five years before you can go on state pension. However, we would recommend that you always speak with a pension adviser before deselecting the risk cover.

How am I covered by insurance policies?

You are covered in the following situations:
• DKK 200,000 in case of death
• DKK 200,000 in case of your own critical illness
• DKK 50,000 in case of child’s critical illness (children under 18 years old)
• Treatment at a private hospital (health insurance)
• Dental treatment (health insurance)

If you do not have your pension documents at hand or if you have several pension schemes and insurance covers, you can find your information at PensionsInfo.dk. Here, you can see your pension schemes from different pension providers as well as the public benefits, such as state pension, Danish Labour Market Supplementary Pension and voluntary early retirement.

If you are an insurance agent, it is instead your employer and the professional representative who agree on the composition of your insurance policies.

Can you take out collective pension insurance policies?

As a member of Finansforbundet (Financial Services Union Denmark), you can take out a collective pension scheme with PFA Pension where you can receive collective insurance policies with, for example, a lump sum payment in case of critical illness and a lump sum payment in case of death. We call the scheme Medlemsplus (MemberPlus). This is particularly interesting for the unemployed or members employed outside the sector.

Read more about the group pension scheme at PFA Pension

Questions about voluntary early retirement and pensioning

Can your pension be paid out before you are pensioned off?

You have limited possibilities for having your pension paid out before being pensioned off. The most important criteria is that you have reached pension disbursement age, i.e. that you are at least five years from state pension age, and the type of pension involved.

  • Life-contingent sum: You can get a life-contingent sum paid out when you reach pension disbursement age.
  • Capital pension or retirement savings: You can get a capital pension or retirement savings paid out when you reach pension disbursement age. If you are paid part of the capital pension while you continue to work, the amount before paying a fee may not exceed your gross salary as of the most recent 1 January. For retirement savings, the amount may not exceed half of your gross salary as of the most recent 1 January.
  • Retirement pension: If you are employed, you must have reached the state pension age before you can have your full pension paid out, e.g. annuity pension, life annuity, etc. However, if you are working with reduced hours and have reached pension disbursement age, you can choose to have a smaller part of your retirement pension paid out so that the payment corresponds to your reduced working hours. This does, however, require that you have stopped making payments to your pension. However, the payout can also commence even if you choose to continue to remain on the labour market.

If you do not fulfil the requirements for your age, you must apply for an exemption to have your pension paid; however, this is only granted in rare cases. You can contact your union representative or local union if you want to learn more about your options.

What should you do if you want to be pensioned off?

Contact your pension company to get advice on how to get the most out of your pension funds. Then, you can decide when it is best for you to stop working. You need to give notice at least one month before you want to stop working.

It is a good idea to tell your company that you are retiring to go on pension. Many companies offer benefits for their pensioned employees, such as continuing to pay interest and fees at employee rates, events for pensioners, summer cottage rentals, etc.

Can your labour market contribution be paid out and can you stop your own payments?

Your labour market contribution can be paid to your pension, and you can choose to stop paying if you are working part-time as a senior citizen or have reached pension disbursement age pursuant to the Danish Pension Tax Act. If you are working part-time as a senior citizen, you can have your labour market contribution paid out as salary on the basis of your previous level of employment. As a senior citizen working part-time, this allows you to partially maintain your past salary.

If you want to have your employer’s contribution paid to your pension, you must contact your pension company so that you can get proper advice on your pension and insurance situation.

What is the relationship between pension and voluntary early retirement?

The Danish Parliament is changing the rules on the relationship between pension and voluntary early retirement on an ongoing basis, and we therefore recommend that you contact your unemployment insurance fund if you need advice.

If you are a member of FTFa, please email akassen@finansforbundet.dk or call our unemployment insurance fund consultant Susanne Ilsøe directly at 32 66 14 50.

Do you have to pay tax on your pension?

We do not provide advice on tax matters, so we recommend that you contact the Danish Tax and Customs Administration (SKAT) instead.

Read more om SKATS's website