The number of Danes dropping out of the labour market could have a knock-on impact on pension savings, Insurance and Pension Denmark (I&P Denmark) has said, after its analysis revealed that more and more Danes are losing the capacity to work.

The data revealed that there has been a 20 per cent increase in the number of Danes leaving the labour market prematurely and receiving compensation for loss of earning capacity in the past three years.

“In total, more than 85,000 Danes receive a payment for lost working capacity from their insurance or pension company because they have completely or partially lost their connection to the labour market”, I&P head of health policy, Mie Rasbech, said.

Gender discrepancies were highlighted within this, as I&P Denmark found that far more women than men lose the ability to work, as while the number of men dropping out of work has increased by 15 per cent since 2021, it has risen by a "whopping" 23 per cent for women.

Trends within different age groups were more concerning, however, as Rasbech said that the fact that we are experiencing an increase in all age groups should "set alarm bells ringing".

“It is a sad development that more and more people are losing the ability to work. And it is especially sad that more young people are dropping out of the labour market,” Rasbech continued.

“We have experienced a 39 per cent increase in the proportion of Danes under 40 years of age since 2021. This is deeply worrying, because it is a long life that one can look forward to without the opportunity to support oneself and become part of a workplace.”

This could also have an impact on retirement savings, as I&P Denmark warned that when payments for loss of working capacity take up more and more space in the accounts of pension companies, it means that a larger part of the payments goes to insurance instead of savings for old age.

“Because these benefits often extend all the way to the state pension age, it is particularly burdensome when young people are affected,” Rasbech added.

According to I&P Denmark, the pension industry pays out more than DKK 10bn annually in payments to insurance against loss of working capacity.

However, it argued that if the number of Danes who drop out of the labour market decreases, there will be more money for pension payments to those in retirement.

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