Danish workers covered by the new collective agreement could see a “significant” boost in their pension savings potential due to a 2 percentage point increase in free choice account contributions, calculations by Sampension have suggested.

According to Sampension’s calculations, if a person with a salary of DKK 350,000 allocates this 2 per cent to their retirement from the age of 25 until retirement age, their retirement savings will increase by approximately DKK 705,000, and the pension payments will increase by approximately DKK 2,500 per month (after tax).

It also found that if a 35-year-old does the same, the pension savings at retirement will be approximately DKK 444,000 larger than otherwise, while the gain for a 45-year-old will be approximately DKK 260,000.

In the collective agreement in the industrial area, it has been agreed that the free choice account, a flexible employment benefit in Denmark that allows employees to decide how a portion of their salary-related contributions are allocated, will increase from 9 per cent to 11 per cent.

The contribution will increase by 1 percentage point as of 1 March 2026 and 1 percentage point as of 1 March 2027.

The industrial agreement is expected to be replicated in the other areas of collective bargaining where negotiations occur. The employee can choose whether the money in the free choice account should be used for additional time off, used as a salary, or deposited into the pension savings.

Sampension chief adviser, Helle Dalsgaard, commented: "It is entirely up to the individual to assess what the money in the free choice account should be used for, and many will choose to receive the increased contribution as salary or use it to take time off.

“But at the same time, there is a movement underway in recent years, where we see that Danes are increasingly prioritising saving and also putting extra effort into their pension savings. This is also expected to be reflected in the fact that a number of employees will let some of the money from the free choice account go to their pension.”

Dalsgaard said that if savers choose to put the increased contribution into their pension savings it can make a “noticeable” difference in the long run.

She added that smaller amounts that are paid year after year can, over time, give a “significant” boost to savings and contribute to there being more savings as a pensioner and help achieve the savers desired standard of living in retirement.

"When you put more money into your pension, the earlier you do it, the greater the effect, and therefore young people in particular can boost their savings with extra contributions,” Dalsgaard continued.

“And in recent years, we have seen a general increase in interest in pensions and also in making extra pension contributions, which may be due to the fact that young people in light of the rising state pension age want to have a say in when they can retire.”

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