These allowances were meant to be paid to the employees to offset inflation. However, the government decided to pay them as a supplementary lump sum pension upon retirement.
In 1980, the government therefore entrusted Lønmodtagernes Dyrtidsfond with EUR 1.1bn deposited into 2.5m member accounts. Lønmodtagernes Dyrtidsfond has not received any contributions since 1980, but since then 1.9m members have received their savings, and Lønmodtagernes Dyrtidsfond has payed EUR 13.4bn as pension lump sums to the members plus tax. At the end of 2017 Lønmodtagernes Dyrtidsfond's assets amount to EUR 5.6bn belonging to 600,000 members.
Lønmodtagernes Dyrtidsfond pays a lump sum when a member reaches the retirement age and leaves the workforce permanently (or when a member reaches the age of 60).
Investment Portfolios and LD Discretionary Investments
Since 1 January 2000, Lønmodtagernes Dyrtidsfond's members have been able to invest their savings in investment portfolios. It is now possible to choose between 10 different portfolios of which four are offered by the four largest mutual funds in Denmark.
Members, who do not choose portfolios, invest all their savings in the large joint portfolio, LD Discretionary Investments. This portfolio also contains any savings, which the portfolio investors have not invested in portfolios.
The portfolio assets represent about 9 % of Lønmodtagernes Dyrtidsfond's total assets. About 12 % of the members had opted for pools in respect of part of or all of their savings.