Denmark: government presents early retirement bill for those with long working lives

On 18 August, Danish prime minister Mette Frederiksen, of the Social Democrat party, presented her government’s proposal, an election promise, to restore early retirement rights for those that have had long working lives. This will entail allowing those who have worked for 42, 43 or 44 years before their 61st birthday (an age that will gradually be pushed back) to retire one, two or three years earlier (i.e. at age 66, 65 or 64 respectively, given that the legal retirement age will be 67 in 2022). According to government figures, almost one in three unskilled and skilled workers aged between 55 and 64 say they are limited in their work because of pain and have a shorter life expectancy than average. Some 38,000 workers are expected to take the option of early retirement in 2022, when the government hopes the measure will be in effect. The proposed scheme avoids penalising people who have worked part-time, experienced periods of unemployment or have taken maternity leave. Self-employed people will also be eligible. During the years of early retirement, the person concerned will receive DKK 13,550 (about €1,820) per month before tax and this amount will be reduced according to what they have accumulated in their pension capital (compulsory second pillar). The sum can always be supplemented by drawing on pension capital. The cost of the measure is estimated at around DKK 3 billion a year (over €400,000), which will be funded by the budget until 2023. Afterwards, however, the government is proposing covering this cost including by reducing tax breaks on the highest incomes and via a social contribution from the financial sector. The proposal has already drawn criticism from the finance industry. The measure has yet to be adopted by parliament, where a majority is yet to be found.