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Contents | Executive summary | How to obtain this publication | Additional info
The following OECD assessment and recommendations summarise chapter 6 of the Economic survey of Denmark published on 19 February 2008.
Contents
The occupational pension system is maturing …
The occupational pension framework reached wide coverage in the early 1990s. Building on agreements between unions and employers, the system aims at supplementing the public pension. Contribution rates have now reached their initially intended levels, so it is a natural time to take stock and assess the system and its outcomes. Combined with the basic and income tested elements of the public pension, the occupational framework has generated pension assets, replacement rates and wealth projections that are now amongst the highest in the OECD. The overall pension system is comprehensive and almost unique in achieving high levels of private pension provision without much legal compulsion.
However, people who are marginally attached to the labour market are at risk of missing out on these gains. The best solution to this problem might be found in labour market policies to increase employment amongst these groups. At the same time, low income workers with strong attachment to the labour market may end up with more income in retirement than they do from work. As such, there is a case for reducing the amount of special concessions and non-pension benefits for seniors. There may also be scope to consider increased choice and flexibility in a range of dimensions of the pension system, notably for the profile of pension contributions and the extent of insurance coverage.
… but taxation of capital income outside pensions needs attention
There are significant differences between the taxes levied on different types of capital income, with pension fund income taxed much more lightly than income from assets held outside the pension system. Also, the combination of pension tax concessions and generous tax deductibility of interest expenditure may nurture tax planning, for example through the use of new flexible mortgage products. Reducing the tax rates on capital income outside the pension system, as well as the tax value of negative capital income, would effectively reduce the tax concession towards pensions and at the same time reduce incentives for tax planning.
Effective capital taxation for pension savings versus other private investment
How to obtain this publication
The Policy Brief (pdf format) can be downloaded in English. It contains the OECD assessment and recommendations.The complete edition of the Economic survey of Denmark 2008 is available from:
- SourceOECD for subscribing institutions and many libraries
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OLISnet, under "Publication Locator", for government officials with accounts ( subscribe)
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Additional information
For further information please contact the Denmark Desk at the OECD Economics Department at eco.survey@oecd.org. The OECD Secretariat's report was prepared by Jens Lundsgaard and David Turvey under the supervision of Stefano Scarpetta. Research assistance was provided by Lutécia Daniel.
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