“I’m feeling a lack of incentive to sign” (Photo: Colourbox)

Why doesn’t everyone have a pension plan with their employer? Many Danes and foreigners believe that such matters are arranged via legislation.

Well in fact, the opposite is true.

Blue-collar blues
Traditionally this is bargained between employees and employers. Up until the late 80s, these bargained deals didn’t include blue-collar workers organised under the trade union confederation LO.

During the 80s, a growing understanding rose among blue-collar workers’ with higher incomes, including members of the metal workers union, who saw the gap between income and state social security and ATP as worrying. The so-called replacement ratio upon retirement was not good enough.

Pensions for the people
The government at the time was supportive of the idea of pension schemes for ‘almost everyone’, but they were also of the opinion that they had to be bargained for between the parties.

The basic opinion was that if done in any other way, pension contributions would be seen as yet another tax. It had to be a bargained deal in an agreed balance with all other elements of remuneration.

Now, some 25 years later, about 75 to 80 percent of the labour market has formed agreements. Some are collectively bargained and many non-organised employers have formed local pension schemes.

On top of that, some individuals have chosen to contribute to a personal pension, of which the payments are often arranged via the employer for tax convenience.

Forced pensions?
A Pension Commission has been set up to deal with a number of issues. One issue is, that means testing reduces a number of state benefits, and that the incentive to save is really negative for many with an average income.

One solution could be to force those who do not contribute to any pension scheme, to do so. If so, legislation could then do away with many benefits and means testing would no longer be an issue. Would this work? It might take 40 years, but will compulsory pension contributions been seen as ‘yet another tax’?