Comment: Get the priorities right...

27.07.2016
  During the quiet days of summer when news is slower than normal, there has been a debate about the need for a further increase in the pension age in Denmark. Apparently, this may become a focal point in a package to be presented by the government later this year.  In my opinion, this is not really where the shoe pinches. The Danish pay-as-you-go public pension system has already been reformed: discretionary increases in the retirement age have been enacted and the retirement age is linked to changes in longevity. Moreover, nominal pension benefits are temporarily indexed to changes in prices rather than wages. Instead, the political energy should focus on putting a cap on the effective tax rate on pension savings. Due to means-testing of pension benefits, the effective return on occupational pension savings is very low in Denmark, especially for low-income groups close to retirement age. Without such a cap, the contributions to the OP system may be dramatically reduced in the future. Bottom line: I stress the importance of getting the priorities right.  You can read more about my take on this in an op-ed article published by Berlingske. The article can be found here. My other recent op-eds can be found here.


Last updated by: Svend Erik Hougaard Jensen 01/08/2016