The Danish government has announced that it is pushing ahead with measures to abolish offsetting of earned income in the basic amount of the national pension and pension supplements.

Last year, parliament in Denmark passed a bill that would make it possible for pensioners to receive their full pension regardless of their own income and whether their spouse or cohabitant has an income from work.

The aim is to remove the financial penalty experienced by pensioners if they take a job after they have retired.

The first part of agreement regarding the abolition of spouse set-off entered into force on 1 January 2023.

Meanwhile, the proposal to abolish offsets due to own work income will take effect from January 2024, but will also apply retroactively from 1 January 2023.

Employment Minister, Ane Halsboe-Jørgensen will present the second part of the agreement in the spring: A new reform package for the Danish economy - Faster jobs and a stronger labor market.

It is expected that the new bill will result in costs of approximately DKK 450m and increase the structural labour supply by 1,050 people when it is fully phased in in 2025.

Commenting on the announcement, Halsboe-Jørgensen said: “I am extremely happy that we are now making it easier for pensioners who want to continue in the labour market to take an extra step - without them being offset against their pension.

“This benefits both the seniors, the labour market and our welfare society. It has long been a wish of the governing parties.

“In total, the government has now removed set-off rules for pensioners, which will have a major impact on up to 130,000 Danes. Including a great many seniors, who now do not need to familiarise themselves with the rules for calculating pensions before taking on extra work.

“Now we ensure that it pays off financially to give one more thorn. Many Danes have fought for this for a long time, and therefore I am proud that it is now going to happen.”

Forsikring & Pension CEO, Kent Damsgaard, added: “The government makes it more attractive for seniors to take an extra step into the labour market and thus contribute more hands to a crowded labour market.

“Right now and here it will affect 50,000 Danes, who will thus not be able to set off their earned income in the national pension.

“We have worked for a long time so that this inappropriate set-off should be abolished. We have one of the world's best pension systems and the government is now helping to make it even better, and at the same time, according to the government's calculations, it will increase the labour supply by just over 1,000 people.”

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