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The Danish Pension System is one of the Best in the World

20. Oct. 2019
A new international survey has once again identified the Danish pension system to be one of the best in the world. This is according to the annual international pension analyses from Melbourne Mercer.

The Danish pension system has for many years come out on top of the list. In 2018, however, the Netherlands managed to take first place, a position they have held on to in 2019. Both Denmark and the Netherlands have collected more points than in previous years.

- It is very well done that the Danish pension system again this year is given the grade A along with the Netherlands as the only two countries to get the top grade. We were expecting to get a high grade again this year. The Netherlands have, however, again been given a slightly better overall grade than Denmark. We have improved the Danish pension system compared to last year. We have for example solved the so-called interaction problem, we have introduced compulsory saving for people who receive public benefits and it has become more attractive for people to stay as part of the workforce even after the official retirement age. As these changes will be fully implemented, we expect this to be reflected in the 2020 Mercer report, says deputy director Karina Ransby.

As a positive element, the Mercer report points to a high level of pension saving in Denmark. The level of saving is a relatively high percentage of the salary for people who are part of the workforce. There is a widespread tendency in Denmark for people to save for their pensions.

As a negative element, the Mercer report identifies that many Danes have a high level of debt, mainly due to house ownership and mortgages. This debt is troublesome for instance in cases of divorce.

This year the Mercer report has particularly looked at the correlation between the level of pension savings and the level of household debt. Mercer finds that the higher the level of pension savings, the higher the level of household debt tends to be. Mercer explains this trend by pointing out that a high level of pension savings gives a sense of security, which makes people more willing to take on debt. The Mercer report does, however, not include the high level of savings that Danes also have in their houses, even though the numbers exist.

The Mercer Global Pension Index looks at the pension systems of 37 countries and evaluates these systems using more than 40 different indicators.

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Michael Riff Alexandersen

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