FAQ – questions and answers about Danish pensions
In both Sweden and Denmark the pension is divided into three components: a government component, a component financed by your employer and a private component. The biggest difference between the Danish and Swedish systems is the size of the various contributions to the pension system. The Swedish government pension is much bigger than the Danish equivalent, whereas people in Denmark normally have a larger private pension. In addition, not all Danish employers contribute to the pension of their employees via a company pension scheme.
Many workplaces in Denmark have a pension scheme that involves the employer paying two thirds of the contribution and the employees paying the remaining third from their gross salary. The Danish company pension is therefore always deducted from the gross salary, whereas in Sweden the occupational pension is additional to the employee’s gross salary. Not all Danish employers have a pension scheme. Instead, you can take out an individual agreement via your trade union, your bank or by contacting a pension fund.
Denmark distinguishes between “retirement pension”, “annuity pension scheme” and “life annuity”. An annuity pension scheme entitles you to a deduction of DKK 54,700 per year (2018). There is no limit to how much you can contribute to a life annuity, and your contributions are deductible. You cannot deduct contributions to a retirement pension.
Your pension will be paid by the country in which you earned it. This means that Denmark will pay you the pension you earned by working in Denmark. However, you must apply for the pension in your country of residence. If you live in Sweden you must therefore apply to the Swedish Pensions Agency for a pension. Please note that this only applies to your government pension. If you have earned an occupational pension in Denmark, you must personally contact the pension fund(s) to which you contributed and inform them that you live in Sweden.
You can leave your pension savings in your Danish pension fund until you retire. In certain cases you can also request the money to be paid out in advance. However, in that case you have to pay 60 percent tax on the amount. Talk to your Danish pension fund about how you can withdraw your pension savings. Normally you cannot transfer your pension savings to a Swedish pension fund, as this would be tantamount to terminating your Danish pension and withdrawing the money early.
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Pension payment when working in Denmark
You apply for your pension in the country of your residence, for both the pension earned in Denmark and Sweden. The exception is if you have only worked in one of the countries. In that case, you must apply for your pension in the country where you received your income.