Danish Labour Market Supplementary Pension
Arbejdsmarkedets Tillægpension, ATP Livslang Pension
Coverage
Mandatory insurance
- All employees between the age of 16 and 66 who work at least nine hours per week.
- The pension scheme also covers almost all individuals on social security benefits (e.g. benefits for maternity leave and sick leave, unemployment benefits, early retirement pension).
Voluntary insurance
- Membership is voluntary for the self-employed.
- The following persons may, at their own request pay contributions to ATP for periods during which they receive the said benefits: individuals who are members of an unemployment fund and who receive transitional allowance (Overgangsydelse) or voluntary early retirement pension (Efterløn) benefits under the Unemployment Insurance Act; individuals receiving early retirement allowance for beneficiaries of the subsidised flexible employment scheme (Fleksydelse); individuals receiving voluntary early retirement pension (Efterløn) without being a member of a Danish unemployment fund.
Financing
General finances
- Fully funded personal pension plans based on contribution payments and capital revenues (i.e. ATP's return on investments and return on savings).
Contribution rates
- The contribution is a fixed amount based on the number of hours worked.
- Contributions are shared between the employer (2/3) and the employee (1/3).
- For almost all individuals on social security benefits, the contributions are divided between the individual (1/3) and Payment Denmark (Udbetaling Danmark) (2/3).
Taxation of contribution payments
- Contributions qualify for full tax deduction, but benefits are taxed as income at the time of payout.
Administration
- ATP is a self-governing institution established by law in 1964.
Qualifying Conditions
- The payment is based on reaching the statutory retirement age of the state pension.
- The payment may be deferred (not beyond the age of 75). The ATP Livslang Pension is increased for each month of deferral. While deferring the pension, the pensioner earns a supplement called thewaiting percentage (Venteprocent).
Benefits
Pension payments
- It is a lifelong supplement to the state pension.
- It also contains a survivors’ lump sum benefit for surviving spouses or cohabitants and for each of the member's children under 21 years of age.
Taxation and social security contributions
- Pension payments are subject to income tax. Lump sums are taxed at 40%.
- The social security contribution is a public tax of 8%.
Coverage
Financing
Administration
Qualifying Conditions
Benefits
Mandatory insurance
- All employees between the age of 16 and 66 who work at least nine hours per week.
- The pension scheme also covers almost all individuals on social security benefits (e.g. benefits for maternity leave and sick leave, unemployment benefits, early retirement pension).
Voluntary insurance
- Membership is voluntary for the self-employed.
- The following persons may, at their own request pay contributions to ATP for periods during which they receive the said benefits: individuals who are members of an unemployment fund and who receive transitional allowance (Overgangsydelse) or voluntary early retirement pension (Efterløn) benefits under the Unemployment Insurance Act; individuals receiving early retirement allowance for beneficiaries of the subsidised flexible employment scheme (Fleksydelse); individuals receiving voluntary early retirement pension (Efterløn) without being a member of a Danish unemployment fund.
General finances
- Fully funded personal pension plans based on contribution payments and capital revenues (i.e. ATP's return on investments and return on savings).
Contribution rates
- The contribution is a fixed amount based on the number of hours worked.
- Contributions are shared between the employer (2/3) and the employee (1/3).
- For almost all individuals on social security benefits, the contributions are divided between the individual (1/3) and Payment Denmark (Udbetaling Danmark) (2/3).
Taxation of contribution payments
- Contributions qualify for full tax deduction, but benefits are taxed as income at the time of payout.
- ATP is a self-governing institution established by law in 1964.
- The payment is based on reaching the statutory retirement age of the state pension.
- The payment may be deferred (not beyond the age of 75). The ATP Livslang Pension is increased for each month of deferral. While deferring the pension, the pensioner earns a supplement called thewaiting percentage (Venteprocent).
Pension payments
- It is a lifelong supplement to the state pension.
- It also contains a survivors’ lump sum benefit for surviving spouses or cohabitants and for each of the member's children under 21 years of age.
Taxation and social security contributions
- Pension payments are subject to income tax. Lump sums are taxed at 40%.
- The social security contribution is a public tax of 8%.
Legal Basis: Act on Danish Labour Market Supplementary Pension (Bekendtgørelse af lov om Arbejdsmarkedets Tillægspension).