Danish people that have received wage rises have generally not increased their pension saving by the same proportion, according to research by Epinion for Sampension.

The survey found that while 89 per cent of Danes have received salary increases during their working lives and 69 per cent have had a wage rise at least every three years, only 21 per cent have increased the percentage of their pension contributions alongside pay rises.

The survey found that 6 per cent had deposited a lump sum into their pension savings.

Just under three-quarters (74 per cent) of 57-65 year olds received salary increases at least every three years on average, while 21 per cent had increased their contributions and 9 per cent have deposited a lump sum.

Furthermore, four out of 10 (40 per cent) respondents in this age cohort have already received or expect to receive a pay rise this or next year, but only 17 per cent plan to increase the percentage of their pension contribution alongside this and 7 per cent were planning a lump sum deposit.

According to calculations by Sampension, if a Dane had an annual salary of DKK 400,000 and pension contributions of 15 per cent, and did not receive any pay rises, they would have an expected pension income of 85 per cent of their salary.

However, if they received an average salary increase of 1.9 per cent a year, then their expected pension income would fall to 53 per cent of their final salary in working life.

"It may at first sound strange that you have to let a larger part of your salary go to savings when you get paid more, because pension payments typically form a fixed proportion of the salary, and therefore pension payments automatically increase in kroner and øre when wages rise,” commented Sampension market and customer advisory manager, Anne-Louise Lindkvist.

“But it is not enough to maintain the pension savings, which unfortunately many Danes are not aware of.

"If you get salary increases during your working life, you continuously raise your standard of living to the new salary level and thus also the expectations for the standard of living in retirement. But one's previous pension payments and pension savings are based on a lower salary level, which given a backlog in terms of savings.

“This must be rectified if the savings at the time of retirement are to be large enough to afford the higher standard of living, and this requires additional savings - either via the pension scheme, in the bank or in the home.”

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