Pensions: voluntary or compulsory?

More and more are avoiding pensions

A pension committee was set up in the early summer of 2014, headed by Professor Torben M Andersen of Århus University, the former chairman of the Economic Council. In August another committee – on unemployment and sick-leave benefits – was set up, headed by Professor Nina Schmidt of the Aarhus School of Business and Management, a former member of the Economic Council.

Compulsory or not to be?
Schmidt was quoted in January by ATP (the semi-public pension provider) advocating compulsory minimum contributions.  The real pension committee has kept quiet.

ATP and Schmidt are making an issue of: firstly, unemployed and low-income earners not contributing to a pensions plan and, secondly, a fair few thousand better-than-averagely-educated citizens who supposedly, but not necessarily, have earned well during their lifespan, but also decided not to participate in a pension plan or savings plan. 

Cheating the system?
The issue addressed is that these citizens are allegedly cheating the social security system, allowing themselves access to the supplementary social security pension, which in theory is reserved for low-income earners.  

One must hope the pension committee has at least two objectives in mind. One is the ‘means testing’ rules and conflicts that every society is facing, and the second is how to provide one in which citizens can build long-term confidence in pension planning. 

Just more tax?
Politicians have shown several shortsighted approaches, seemingly driven by tax proceeds more than long-term pension perspectives. Many changes are difficult to understand for the man on the street and, worse, can create a feeling of being cheated.  

I have difficulties believing that younger people refrain from pension contributions in order to collect approximately 3,000 kroner extra per month. If needed, these means testing rules should be adjustable and should not be an argument for demanding compulsory minimum contributions, which would soon be seen as mere tax.





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