The Danish parliament has passed a bill that will exempt state pensioners from offsetting, which takes effect retrospectively from 1 January 2023.

This law change means that Danish state pensioners will receive their entire basic amount and pension supplement, regardless of whether they have an income from additional work.

It is expected that around 40,000 pensioners will benefit from the change this year, rising to around 50,000 in 2025.

Affected state pensioners will receive an average of around DKK 30,000, before tax, more in annual state pension payment as a result of the abolition of offsetting.

It is expected that the law change will contribute to an increase in the labour supply of around 950 people this year, rising to around 1,050 in 2025.

As the change has taken effect from 1 January 2023, state pensioners who have had their basic amount and pension supplement reduced this year will get their money back with the subsequent adjustment for 2023 in 2024.

"Today is a really good day for up to 50,000 state pensioners who experience being offset against their state pension because they work on the side,” commented Danish Employment Minister, Ane Halsboe-Jørgensen.

“They can now say yes to extra work without being set off. It will of course be a financial motivation for many, and we expect that more pensioners who can will continue to work.

“It will benefit both the private and the public sector, which are short of hands, because seniors with their knowledge and experience are a valuable resource.

“I think we have found the right balance with the proposal, as the national pension is still targeted at those who have the least. Therefore, it is also only the basic amount of the national pension and the pension supplement that are affected by the changed rules for set-off.”

According to a survey from Sampension, 76 per cent of Danish people feel the law change will lead to them considering working in retirement.

"Danes generally stay longer in the labour market, and many also want to continue working as a pensioner, e.g. a few hours or more a week if there is an opportunity and health permits,” said Joint Pension CEO, Hasse Jørgensen.

“It will now become more financially attractive with the new rules, which must therefore also be expected to contribute to getting significantly more both current and future pensioners to choose to work to one extent or another in retirement."

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