State Pension
Your savings will not be offset against either your state pension or your senior citizen’s allowance. The state pension consists of a basic amount and a pension supplement. LD Savings are not offset against either the basic amount or the pension supplement of the state pension, and this applies regardless of when you receive the savings.
Payouts from life-long pension schemes or instalment pensions, on the other hand, may be offset against the state pension and the senior citizen’s allowance.
Early retirement benefit and offset
Different rules apply to offsetting against your early retirement pension depending on when you were born, and whether you take early retirement within two years of your early retirement certificate being issued, or whether you wait until after two years.
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Your LD Savings alone will rarely result in an offset of your early retirement benefit, as the amount saved is not large enough to do so. However, your LD Savings are taken into account alongside your other pensions, and your total pension entitlements may result in a reduction in your early retirement benefit during the first two years following the issue of your early retirement certificate.
If you take early retirement two years after your early retirement certificate was issued, and you have worked for at least 3,120 hours (as a full-time insured person), your LD Savings will not be offset against your early retirement benefit.
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You are subject to rules which mean that your pensions will result in a reduction in your early retirement benefit, regardless of when you take early retirement. Your savings with The Cost-of-Living Allowance Fund are included in the offset basis on an equal footing with other pensions.
Early retirement benefit reporting
Here you can read more about when you take early retirement and when your LD Savings must be reported.
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Like banks and pension companies, the Cost-of-Living Allowance Fund (LD) must report pension information to the Danish Tax Agency. The value of your LD Savings must therefore be reported to the Danish Tax Agency six months before you reach the age of early retirement.
So even if you withdraw your LD Savings before taking early retirement, they will still be included in the offset base.
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The gross amount – i.e. the amount in your account including tax payable to the government – at the time of reporting.
If you have had your LD Savings paid out, we must report the gross amount that was in your account at the time of the payout.
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If you have an LD Retirement Savings plan on which tax has been paid, LD must calculate and report a value for your savings that corresponds to the value the savings would have had if the tax had not been paid at the time of reporting.
If you have had your LD Retirement Savings paid out, LD must calculate and report an amount corresponding to the value your savings would have had at the time of payment if the tax had not been paid.
