Danish pension provider Velliv has put out a public call for politicians to reform a range of pension and labour market conditions in the Nordic country, saying the new pledge from the ruling Social Democrat party to do away with automatic increases in the state pension age does not go far enough.
Kim Kehlet Johansen, chief executive officer of the mutual pension provider, said: “There is a need for more than an overhaul of the pension system.
“We need to look at the framework for the labour market, where stress and other mental illnesses affect Danes as never before.”
Kehlet Johansen, who was chief risk officer at the Danish statutory pensions giant ATP before moving in March to Velliv, was responding to a new proposal from prime minister Mette Frederiksen and her Social Democrat party.
The party plans to make changes to the landmark 2006 welfare settlement established in Denmark – in particular by doing away with an automatic increase in the state pension age as Danish life expectancy rises.
As the political season kicks off following summer holidays, Frederiksen told Denmark’s national broadcaster DR on Monday: “We think it is right to say – well in advance of the next election – that this is the last time we will vote for the automatic raising of the retirement age.”
Next year, the Danish parliament is set to vote for the retirement age to be raised to 70 for Danes born after 1 January 1971.
The automatic increase in the agreement would see the state pension age rise gradually, potentially reaching 74 in 2070, if Danes continue to live longer than before.
“It is crucial for society to retain more Danes on the labour market on a voluntary basis”
Kim Kehlet Johansen, Velliv’s CEO
Kehlet Johansen is calling for reforms such as more flexibility around pension payments - allowing people to return to work after retirement, for example; the opportunity to use pension savings to finance career breaks, as well as stronger incentives for people to save for individual pensions.
The CEO said Velliv welcomed the political debate, and wanted to take part in “making one of the world’s best pension systems even better for the benefit of the Danes”.
“Seen in isolation, I would like a pension reform to contribute more flexibly and purposefully to a life that, for the vast majority, will involve more years in the labour market than previous generations have been used to,” he said.
Many people simply regretted having retired, he said, and would rather work.
“In addition, I believe that we need to take a closer look at whether pension savings in the future can contribute to financing, for example, educational breaks – which are becoming increasingly necessary in line with a longer working life, and because society is changing more and more rapidly,” said Kehlet Johansen.
His proposal to bolster pension saving incentives is one of the pieces of advice contained in the Pension Commission’s 2022 report.
But the Velliv CEO said any relaxation of conditions around pensions and retirement should not put pressure on the labour supply for Danish companies.
“It is crucial for society to retain more Danes on the labour market on a voluntary basis,” he said.
Danish firms had an enormous need for labour, both now and in the future, he said, and while Danes were working longer and longer, he said Velliv’s surveys indicated many were prepared to work for even more years.
“We must maintain and develop this,” he said, adding: “It does, however, require us to put some framework in place for the labour market that contributes to improving the well-being of Danish people.
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