As part of an emerging public debate in Danish politics on pensions reform, the pensions lobby has warned that any relaxation of the landmark welfare agreement should be combined with measures to boost pension savings.
Also, the leaders of Denmark’s Liberal Party – the second largest parliamentary party and part of the current Social Democrat-led government – have come out with their response to Social Democrat prime minister Mette Frederiksen’s pledge to end automatic increases in the state pension age in the Nordic country.
Frederiksen’s vow would mean a political renegotiation of the 2006 welfare agreement.
Troels Lund Poulsen, Liberal Party chair, and Stephanie Lose, the party’s deputy chair, said in a party statement on Thursday that it was not enough to see a good working life as a simple matter of the length of that working life.
“Instead, we believe we need to look at the whole of working life. Across generations,” the pair wrote, citing the potential introduction of measures to alleviate stress during careers, associated with work-life balance.
“We propose setting up a ‘working life commission’ that will be able to look at how we can ensure Danes a better and more flexible working life,” they wrote.
Lund Poulsen and Lose said the welfare agreement formed a solid foundation for the Danish economy, which, inter alia, made it possible to invest in the nation’s common welfare, the green transition, defence and security.
“So changes to the agreement are not something we in the Liberal Party take lightly either, because it really means a lot to the Danish economy,” the pair said.
They added that more and more retired people were going back to the job market, which was a valuable dynamic for society.
Also, many families with children were under pressure, they said, finding it hard to balance work and family life, and added that many Danes were affected by stress long before they even reached retirement age.
“We think these are important agendas in Danes’ working lives,” the Liberal Party leaders said.
The pensions industry association responded to the Social Democrat promise to renegotiate the welfare settlement saying that a more relaxed indexation of the retirement age in the future was a political decision, but that increasing Danish life expectancy put even greater demands on pension savings.
Kent Damsgaard, IPD’s chief executive officer, said the Pensions Commission, which was set up by the previous government, had proposed increasing the tax deduction for pension savings.
“Recently, there has been a lot of debate about whether some groups of young people are saving too much for retirement, because the retirement age is increasing many years ahead,” he said.
“If the proposal for a relaxed indexation becomes a reality, on the contrary, there will be a simultaneous need for political support for Danes to save more, because they will have the prospect of more years as pensioners,” said Damsgaard.
Regarding the Liberal Party’s ideas, IPD said it made very good sense to set up a working life commission, which could take an overall look at the need for flexibility, a good and long working life and a solid pension in the future.
But Damgaard also said many of the wishes currently being expressed for pension system change pulled in different directions.
“We have one of the world’s best pension models in Denmark,” he noted.
“But if you follow the debate right now, Danes’ savings must be able to finance a more flexible family and working life, young people’s purchase of owner-occupied homes and several years of retirement.”
“It goes without saying that it cannot be done unless savings are massively increased,” he said.
Kim Kehlet Johansen, CEO of Velliv, said last week that Denmark needed a range of reforms around pensions and working life, including more flexibility around pension payments, allowing people to return to work after retirement, and the opportunity to use pension savings to finance career breaks.
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