Low Danish Pension Savings Remains Very Modest Problem
03 July 2012 (PLANSPONSOREurope.com) - While Danish household debt is on the rise and plan sponsors have a role to play in increasing pension savings among Danes, low pension saving remains a “very modest” problem, according to a spokesperson for Denmark’s insurance association Forsikringogpension.
The latest quarterly report from Denmark’s National Bank says an increase in pension savings is not the cause of the Danish debt between 1995 and 2009.
New analysis by Denmark’s Insurance Association confirms the findings of the report.
For tenants, the debt ratio has increased from just over 50% in 1995 to roughly 80% in 2009, while the debt ratio increased most for those with low pension contribution rates.
A spokesperson for Forsikringogpension told PLANSPONSOR Europe: “The Danish National Banks in some articles in their latest quarterly review have discussed whether increased pension contributions are the reason why household indebtedness has increased. We found out it wasn’t the pension savings – it was the situation in the housing market. If you are an indebted householder and you have debt in your house it is still an advantage to have a pension when you retire. Then you can afford to pay down the deficit. The Danish householders are indebted but they have a lot of resources in their pension schemes.
“The contribution rate of the pension schemes is negotiated by the employer organisations and the trade organisations.
“Employers do have a role to play so people will make contributions. The problem in Denmark of a group with lower savings is very modest.”