Accordingly, we make sure that as much as possible of a member’s pension contributions are allocated to his or her Retirement Account. Retirement Account benefits are not subject to taxation and are not offset against public benefits such as pension supplements and housing benefits. On the other hand, contributions are not tax-deductible.
PensionDanmark’s insurance and pension products are designed to provide financial security for our members and their families in the event of permanent loss or reduction of income from employment.
Accordingly, our insurance and pension products are composed on the basis of three main considerations:
- The number one priority is retirement savings that will eventually supplement state pension benefits (after setoff where relevant) and labour market supplementary pension benefits (ATP).
- Benefits are intended to provide members and their families with a supplement to public benefits, primarily on retirement due to age or anticipatory pension. In determining insurance covers, we therefore take all pension benefits into account, including public pension benefits and labour market supplementary pension benefits.
- The amount of benefits and payout terms must be aligned with the purpose of retaining a reasonable financial incentive for individual members to remain in the labour market rather than receive passive welfare benefits. Accordingly, covers and terms are determined at a level ensuring that working entails financial gains and that, despite the very liberal admission terms, a right to coverage cannot be obtained after an injury has occurred.
Premiums reflect the underlying risk, the aim being for the risk result to balance over a short span of years. Premiums are determined on a group pricing basis so that members pay the same per DKK 1 cover irrespective of gender and age.
Freedom – not requirement – to choose
Members have the option of making a number of adjustments to their pension schemes in relevant areas. This is important especially because default covers and products are based on best estimates reflecting general member circumstances. When members exercise such options, they are made aware of the consequences of choosing and of the choices they make.
Aligning insurance covers with the Danish labour market retirement reform
PensionDanmark’s members stay longer in the labour market, which is in accordance with the intentions of the Danish labour market retirement reform. We have adjusted our insurance covers accordingly:
Cover for certain critical illnesses
Cover is not subject to an upper age limit. Cover will not cease until the member begins to receive retirement pension benefits. However, cover will always cease, irrespective of age, if contributions are discontinued and the member thus becomes inactive.
Cover on death
Members retain the right to receive the minimum sum on death until reaching the state pension age applicable to the relevant generation. This amendment has been adopted by PensionDanmark’s Board of Directors and implemented in our insurance conditions. It will take effect in 2019, when the state pension age is increased from currently 65 years.
Cover for anticipatory pension (supplementary anticipatory pension benefits and savings balance protection)
Cover will cease three years before the state pension age applicable to the individual generations. We have set this limit because studies show that most members who are now approaching state pension age still participate in the voluntary early retirement scheme and are therefore likely – like today – to leave the labour market approximately three years before state pension age.