Denmark’s statutory pension fund ATP has countered with its own analysis the headline-grabbing conclusion of academic research earlier this year which claimed Danes were accumulating excessive pension wealth.
Martin Præstegaard, ATP’s chief executive officer, said: “There are very few people who, thoughout an entire working life, pay 12%, 15% or 18% of their income into their pension, every single year.”
Præstegaard was referring to assumptions used in a controversial article by the academic Henrik Ramlau-Hansen published in the academic journal FinansInvest in August asserting that early retirement on the basis of excessive pension assets was a real problem in Denmark in the light of the Nordic country’s shortage of workers.
The DKK684bn (€91.7bn) pension fund said in its analysis article, published today, that with the expansion of Danish pension schemes in the 1990s, and parliament’s adoption of the welfare settlement (Velfærdsforlig) after the millennium – which ensured the retirement age would follow life expectancy increases – more people were saving for retirement and many would save for a longer period in the future.
“Although it is expected that self-retirement before the national pension age will increase in the future, the total withdrawal before the national pension age is not expected to increase,” ATP said in its analysis.
“The challenge for the Danish pension system is more precisely that there is still a large group that does not save very much, and this creates a free-rider problem,” it said.
The “free-rider problem” – a topic ATP has spoken out about previously – describes the situation where the system allows people who could save for their own pension to chose not to, leading to other pension savers having to co-finance their pensions.
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