Denmark's Sampension has introduced an equalisation mechanism to avoid major fluctuations in pensioners' payments.

The pension company’s motivation follows a difficult year in 2022, which led to some pensioners seeing a greater decrease in pension payments in 2023.

“We would like to avoid such a situation in the future. Therefore, on 1 January 2024, Sampension will introduce a new equalisation mechanism to limit major drops in pensioners' monthly payments, for example, if there have been negative returns,” Sampension stated.

In practice, the equalisation works by setting limits on how much pensioners' monthly payments may change from year to year. This means that in years with poor returns, Sampension will limit the reduction in monthly payments.

However, it also means that pensioners will not experience the same large increase in monthly payments in years with very good returns. In this way, larger fluctuations in the monthly payments due to large fluctuations in the market return are mitigated.

Levelling the payments to pensioners will henceforth be part of the regulation that takes place every year in January. It is only used in years where the payments are set to increase or decrease by more than the limits that have been set.

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