Seven per cent of Denmark's workforce (150,000 employees) do not make any pension contributions over the course of a year, with those employed by small and medium-sized enterprises (SMEs) most affected, according to figures from Insurance & Pension Denmark (I&P Denmark).

Among the smallest businesses, those with one to four employees, 29 per cent of workers do not contribute to a pension; the figure fell to 14 per cent in companies with five to nine employees.

I&P Denmark head of pensions, Lotte Katrine Ravn, said: "We can see that half of the employees who do not contribute to a pension during the year work in companies with fewer than 10 employees.

"This naturally increases the risk of not having built up an adequate pension pot by the time they reach the state pension age.”

She added that these employees differ from those who are automatically covered by mandatory collective occupational or company pension schemes.

Indeed, I&P Denmark said the picture is very different in larger businesses, where the majority of employees are covered by a pension scheme. In companies with at least 30 employees, only 4 per cent do not make pension contributions.

Based on this, the association argued that there is a need to raise awareness of pensions among the smallest businesses.

This also concerns business owners themselves, as many self-employed people do not contribute to a pension, and in smaller businesses it is often the case that neither the owner nor their employees are saving for retirement.

However, the figures suggested that when employees are enrolled in a pension scheme, business owners are also more likely to establish one for themselves.

"It is important that both business owners and employees understand the consequences of not saving for retirement. Without a pension, people risk having significantly lower financial security later in life," Ravn said.

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