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Denmark Raises Pensions Age

By Meagan Rees, IPE International Publishers Ltd

Denmark

June 27, 2006

The Danish government has secured a ‘historic’ social welfare agreement, which will see an increase in state pension age and small rise in early retirement age in its bid to tackle the effects of longevity. 

According to the welfare reform bill, the pension age will increase from 65 to 67 between 2024 and 2027, and early retirement age will rise from 60 to 62 between 2019 and 2022. 

This means that people currently under the age of 48 will not be able to qualify for an early retirement until they are 62. Similarly, they will also not be able to claim a state pension until they turn 67. 

Furthermore, “as of 2025, the age limits in the retirement system are indexed to the mean life expectancy of 60 year olds, so that the combined period with early retirement and public pension will be around 19 years in future,” a spokesperson for the International Monetary Fund told IPE. 

“If life expectancy does not change, the early retirement age stays at 62 years and the pension age at 67.” 

The government’s welfare package – cemented by the ruling Liberal-Conservative coalition, the Social Democrats, the Danish People’s Party and the Social Liberals – aims to prepare Denmark for the challenges of an ageing population, said the IMF in a consultation document. 

It includes reforms on pensions, education and integration. 

According to ‘The Copenhagen Post’, this agreement is a culmination of a long political journey, which started in 2003 with the establishment of the Welfare Commission to address the implications of longevity on public spending. 

“The broad agreement …is a significant achievement and will help Denmark in maintaining sustainable public finances in the medium to long term,” said the IMF.

The Danish public have largely welcomed the social reforms, according to a Gallup poll by the daily newspaper ‘Berlingske Tidende’. 

Some 61% of the public supported the changes to the early retirement age, and over 50% agreed with the increase in state pension age. 

“I am positively surprised, I have to say,” said Danish finance minister Thor Pedersen in a report by ‘The Copenhagen Post’. 

“I didn’t believe that the support would be so widespread from day one, but it’s probably due to a discussion taking place for several years, so people have had a chance to get used to the idea.” 

Meanwhile, the Social Liberal party believes that the lack of widespread opposition to the reforms suggest government could have gone further. 

However, following the conclusion of the agreement, Danish prime minister Anders Fogh Rasmussen told newspapers: “This is a deal, which to a large degree puts Danish society on the offensive when it comes to arming ourselves for the challenges of the future.” 

No one was available for comment at the Danish finance ministry. 


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