DENMARK - Danes paid a record DKK116bn (€15.58bn) in pension contributions in 2009 despite the financial crises, according to latest numbers from the insurance association, Forsikring & Pension. However, officials warn contributions will fall in 2010.

According to the F&P prognosis, contributions will fall this year to DKK108bn. The fall will affect both personal and occupational pensions because of growing unemployment, and leave less money in pensions in general.

For each 50,000 people out of work, pension contributions fall by approximately DKK1.5bn, F&P calculations suggest.

One reason for the record payments in 2009 is voluntary pension plan holders tapped opportunities to save as much as they could before a cap on contributions is introduced. Similarly, money from the country's SP scheme (Særlig Pensionsopsparing) or Special Pension Saving Scheme - a minor second pillar mandatory scheme which is closing - was transferred to other pension savings schemes.

SP has run alongside Denmark's giant Labour Market Supplementary Pension Plan (ATP) for the last decade. During that time, the scheme has been reshaped several times, and there have been calls in the last few years for it to be closed altogether.

In much the same way as a monetary policy instrument, the government has used the SP scheme as a way of regulating the economy.

In May 2009, the government announced SP members would be allowed to withdraw their money. When 83% did so, it said it would put forward a bill to close the scheme completely and the scheme will be officially closed on 30 April 2010, so all members who have not withdrawn their funds or transferred them to another pension scheme will then have their money automatically transferred to their bank accounts. (See earlier IPE story: Danish SP money likely to be reinvested, claims PKA)

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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