Chapter

Denmark: The Silent Revolution towards a Multipillar Pension System

Jørgen Goul Andersen

in The Varieties of Pension Governance

Published in print March 2011 | ISBN: 9780199586028
Published online May 2011 | e-ISBN: 9780191725586 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780199586028.003.0007
Denmark: The Silent Revolution towards a Multipillar Pension System

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Denmark developed a multipillar pension system, adding private pensions to its universal flat-rate, tax-financed ‘people's pension’. Following the failure to introduce a public earnings-related supplementary pension, fully funded ‘labour market’ pensions were added through collective agreements between employers and trade unions, extending these occupational pensions to nearly all employment groups since the early 1990s. Comprehensive institutional change took place almost without any legislation by non-state actors, except for the reform of the public basic pension which became increasingly means-tested. Private pension governance is typically left to pension funds or to special life insurance companies jointly owned and controlled by unions and employers. Strict rules protect pension funds against financial shocks, but these were eased during the financial crisis to improve returns on these defined-contribution (DC) pensions. Nevertheless, the Danish pension system looks quite satisfactory from both an economic and social policy perspective.

Keywords: Denmark; pension reform; basic pension; multipillar pension system; occupational pensions; defined-contribution pensions; employers; trade unions; pension fund governance; financial crisis

Chapter.  11496 words.  Illustrated.

Subjects: Political Economy

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