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International

Danish government allows more retirement flexibility in new public pension system

The Danish government reached an agreement over a new public pension system but will not increase the retirement age, said the Danish ministry of finance, Finansministeriet.

The ruling coalition reached an agreement with the Danish People's Party on Tuesday. The proposed system is expected to be approved by a majority in the Parliament in the fall. Denmark will then adopt the system on Jan. 1.

Although the retirement age was not increased, the new public system will allow Danes to extend their working lives by a number of years during which they will receive both a salary and a pension for the additional years. Once they enter retirement, the pension for these additional years will be paid out. Currently, employees do not receive additional pension considerations after age 65.

The package also amends the format in which retirees will receive their pension and the threshold for early retirement. Under the new system, retirees will be allowed to collect pensions in installments over a period of time or as one lump sum as they enter retirement. Early retirement age was reduced to three years from five years prior to official retirement age of 65.

The new pension package follows last year's proposal by a different government, which intended to increase retirement age by six months due to the longevity of the country's population. The ministry said that the Danish population was aging faster than expected in 2006 when the previous system was launched, and in 2016, the pace reached what was initially a 2050 forecast.