DENMARK - The Danish government's decision to carry on suspending payments into the Special Pensions Savings Programme does not go far enough and the scheme should be scrapped completely, according to the Danish Insurance Association.

The government announced earlier this year mandatory payments in the Special Pensions Savings Programme (Saerlige Pensionsopsparing, SP) would be reinstated next year, however, finance minister Thor Pedersen said in the latest budget announcement the suspension of SP contributions will now continue beyond January 1 2008.

The Danish Insurance Association (Forsikring & Pension) has responded by arguing "but this is not enough," and now believes "the SP system should be abolished completely".

The SP scheme was introduced as part of second pillar pensions provision in 1998 and it is now administered by the Danish Labour Market pension scheme ATP.

According to the SP rules, all employees contribute 1% of their gross pay to the scheme, but payments were halted by the government between 2004 to 2007.

A spokesman for the insurance association claimed it was wrong for the SP scheme to be used as a tax tool. Even though people did not have to contribute to it at the moment, the very existence of the scheme made it harder for them to plan properly for their pension.

"On top of all the other pensions, the SP system makes it hard for the individual to get an overview and plan how much they will have to live on when they are old," the association said.
 
"A pension is a long-term investment that should ensure the individual Dane has a decent standard of living as a pensioner," said Per Bremer Rasmussen, the association's administrative director.

"Pension savings should take place in a stable framework, within which one can plan over many years," he said.

Danes have, in general, paid more into their pension schemes in the last few years, and this is seen as a positive development, he said. But he warned rules on mandatory payments into the SP scheme could put the brakes on this growth.

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