Account transfer

Your savings with The Cost-of-Living Allowance Fund can be withdrawn once you turn 60, regardless of whether you are still working, have taken early retirement or are retired. Many people leave their savings until later, but this is a personal choice. Once you turn 60, you can request payouts by logging into the self-service portal with your MitID, and you will then receive the money in your NemKonto within 14 days.

If you transfer your LD Savings to another pension scheme, the LD payout rules will no longer apply.

It is the pension provider or financial institution to which you are considering transferring your savings that should advise you on the withdrawal rules under your new scheme.

The Cost-of-Living Allowance Fund has low administration and investment costs. You can read more about the annual costs here.

The low costs are a benefit to members, as we credit the full return, minus tax and costs, to members’ accounts.

You can log in to your LD Account and view the exact costs applicable to you, both in DKK and as a percentage. Log in.

Your bank or pension provider can inform you about the costs associated with other pension schemes, including both direct costs and indirect costs that are deducted from your returns, even though these are not shown on your pension statements. 

When transferring a pension, we charge a fee of 60 kr. plus 0.40 per cent of the value of the savings.

In the past, pension companies often guaranteed a minimum return, but nowadays they have moved towards offering products where the value of your pension depends on developments in the financial markets.

There is no guarantee of a minimum return with the Cost-of-Living Allowance Fund. The value of your savings corresponds to your share of the fund’s assets. By law, the fund’s assets must be invested in securities, and as share and bond prices fluctuate constantly, the value of your savings also changes from day to day.

If, over the years, you have had your LD Savings invested in the LD Discretionary portfolio, you have, since 1979, received a return averaging almost 10 per cent per year.  We cannot guarantee that future returns in LD Discretionary will also be at this level. With MitID, you can log in and view your own returns over time.

If you compare the returns you have received with us with the returns your pension provider is promising you if you transfer your funds, you should also consider the risk associated with the new pension product.

If you are entitled to a tax credit, a tax of approximately 37 per cent will be payable on your LD Savings. The tax will be higher if you have opted out of the tax credit. 

If you transfer your savings to an annuity or life annuity pension, the payouts from these will be taxed as personal income. The tax rate may be higher or lower, depending on where you live and your income circumstances.

The LD Retirement Savings scheme is not subject to the equalisation tax, which applies to pension payments above a certain amount until 2020.

tax credit

The tax credit allows you to reduce the tax payable on payouts or to have your savings transferred to an LD Retirement Savings scheme, which can later be withdrawn tax-free. The LD Retirement Savings scheme can be transferred to a similar scheme with another pension provider. If you are considering transferring your LD Savings to a life annuity pension or an instalment pension, you must opt out of the tax credit. Read more about the tax credit here.

The Cost-of-Living Allowance Fund, the tax on returns is slightly lower than 15.3 per cent, because we do not pay tax on the portion of the return attributable to the LD assets in 1982.

We have ensured that members who may experience a negative return will also benefit from a more favourable tax treatment of their returns once these have returned to positive territory. If you incur a negative return in a calendar year, we will not deduct pension return tax until the negative return has been offset against the positive pension return tax in subsequent years.

If you choose to transfer your savings immediately after a period of negative returns, you will lose the opportunity to have them offset against any negative pension return tax in the event of a subsequent positive return.

Your LD Savings have no impact on your state pension. Your LD Savings are not taken into account when calculating your pension supplement, regardless of whether you have them paid out or not.

If you transfer your LD Savings to a pension scheme that provides regular payouts (an instalment pension or a life annuity), you may find that your pension payouts result in you receiving a lower state pension. 

Will it be offset from my early retirement pension?

All pension schemes may result in an offset from your early retirement benefit, unless you were born before 1 January 1956. However, ATP savings are exempt.

Read more about the state pension and early retirement benefit

In 2015, it became possible to convert an LD Account into an LD Retirement Savings account. This opens up new options when transferring funds held with The Cost-of-Living Allowance Fund, as an LD Retirement Savings account can be transferred to a retirement savings account or a retirement insurance policy with another pension provider. However, once converted to an LD retirement savings scheme, the funds can no longer be transferred to an annuity pension or an instalment pension. 

If you think it would be in your best interests to transfer your LD Savings into an annuity pension or an instalment pension, you should decline the option to convert them into an LD Retirement Savings scheme. You can wait to make a decision until we write to you approximately 9 months after your 60th birthday.

You can only switch to LD Retirement Savings once you have turned 60, or if you are otherwise eligible for a payout. 

Go to ‘Tax Credit’ and read more there.

LD Savings can be transferred to pension schemes offered by banks and pension companies.

• An LD Savings plan can be transferred to a lump-sum pension, an instalment pension or an annuity pension with regular payouts.
• LD Retirement Savings can be transferred to a retirement savings plan or a retirement insurance policy, where the payouts are made as a lump sum.

LD Retirement Savings differs from LD Savings in that the tax due to the state has already been paid, and you will be able to withdraw the amount tax-free (free of tax).

Tax laws

When the bank/pension provider, in agreement with you, arranges for the transfer of LD funds, the bank/pension provider must guarantee that this constitutes a pension transfer in accordance with the Pension Taxation Act. If the Pension Taxation Act is not complied with, we must deduct 60 per cent of your balance in connection with the transfer.

The bank or pension provider you wish to switch to must advise you on tax, costs, returns and risk.

Transferring an LD Savings account

Lump-sum pension (lump-sum insurance/transitional benefit)
No new lump-sum pension schemes will be set up, but you can transfer your LD Savings into a lump-sum pension scheme that you already have. The payouts will be made as lump sums, although there is the option of making several partial payouts. Upon payment, the amount in a lump-sum pension is subject to a 40 per cent tax rate.

Instalment pension (annuity insurance)
LD Savings can be transferred to an instalment pension. Payouts will be made in either monthly or annual instalments for a minimum of 10 years and a maximum of 25 years, and the instalments will be taxed as personal income.

Life annuity (retirement pension)
LD Savings can be transferred to a life annuity or similar scheme. Payouts will be made as a regular benefit. These payouts may be for life or cease after an agreed number of years. The payouts are taxed as personal income.

Insurance products
There are also insurance products to which an LD Savings scheme cannot be transferred without the Cost-of-Living Allowance Fund being obliged to deduct 60 per cent in tax. Generally speaking, LD Savings can be transferred to insurance products linked to a pension scheme.

Transferring an LD Retirement Savings account

LD Retirement Savings can be transferred to a retirement savings scheme or a retirement insurance policy with a bank or a pension provider. Payouts can be made without paying tax to the state.

If you are eligible for payouts, you can convert your LD Savings into an LD Retirement Savings scheme. Read more under ‘Tax credit on LD’.

Fee for transferring an LD Savings account

If you transfer your LD Savings account, we will charge a transfer fee of 60 kr. plus 0.40 per cent of the value of the savings. If your savings are worth 100,000 kr., the transfer fee will be 460 kr. The fee covers the administrative and investment costs incurred by The Cost-of-Living Allowance Fund in connection with the transfer.

The bank or pension company must request a transfer

Tax regulations prevent us from processing your enquiry regarding the transfer of your savings. You must arrange with your bank or pension provider for them to request a pension transfer and for them to guarantee that the rules of the Pension Taxation Act are complied with.

The bank or pension provider must use the Insurance & Pensions portal for pension transfers. We do not process letters from banks and pension companies regarding the transfer of pension funds.

Cooling-off period

Even if you have already agreed with your bank or pension provider that they should transfer your LD Savings, you have the right to change your mind.

Once we have received your transfer request, we will send you a letter informing you when you can expect your LD Savings to be transferred.

If you wish to cancel the transfer, simply contact us before the deadline we have stated in the letter.

Further information

There may be specific circumstances or rules that you should be aware of. The pension provider you are considering transferring to is obliged to advise you on the implications of transferring your LD Savings for you.

You can look for further information yourself

You can find more information about:

State pension and early retirement pension
www.borger.dk

Pension schemes
www.forsikringogpension.dk

If you choose to transfer your LD Savings to another pension scheme, you should expect it to take just over a month from the time we receive the request from your new scheme until the money is credited to your account.

Before the move goes ahead, you will have the opportunity to cancel. You will receive details of the cancellation period in a letter from us.