In Denmark, there are three different types of pension: statutory pensions, labour market pensions, and individual pensions. As an employee of AU, you will automatically be part of a labour market pension.
When you start working at Aarhus University, a labour market pension scheme will be set up for you as part of your employment contract. Here are some things you should know about the labour market pension system in Denmark.
When you work at Aarhus University, you are considered a state employee, which means that you are covered by a pension scheme as part of your employment (pursuant to the collective agreement for university graduates employed in the state sector). It is mandatory to pay into a labour market pension scheme, and the scheme is based on solidarity. For this reason, a fixed contribution – based on your salary – is paid into a pension fund every month. If you are eligible for and opt for the pension exemption scheme, this contribution is paid out to you as salary instead.
The collective agreement for university graduates employed in the state sector stipulates that university graduates employed in the state sector in Denmark are connected to a specific pension fund based on which degree they have.
Your pension contribution is paid into your pension fund from your salary. This contribution covers your pension but, in most cases, it also covers an administration fee and various other insurance policies (such as group life insurance and insurance to support your family if you’re unfit to work).
Ask your pension fund about these fees and insurances and whether they are mandatory.
Please be aware that pension funds in Denmark operate as private companies, which means they all have different fees, policies and investment portfolios.
Pension funds in Denmark invest pension savings on an ongoing basis and on market terms. This means that you may see fluctuations in your pension savings.
You can ask your pension fund about their investment portfolio, as you might be able to choose between different portfolios.
In Denmark, there are three different types of pension: statutory pensions, labour market pensions, and individual pensions.
Under this scheme, pension contributions are exempt from taxation when they are paid into the pension fund. This means that you will not need to pay tax on pension contributions transferred to your pension fund. Instead, tax will be deducted when you request that your pension savings are paid out. Any return on the investment will be taxed at 15 % (PAL tax), which is lower than the usual rate of tax for returns on investments in Denmark (on average 38-42 %).
If you choose to take out your pension savings when your employment ends and you’re not of retirement age, the current taxation rate and administration fee is approximately 60%. If you choose to take out your pension savings when you reach retirement age, the taxation rate will depend on your tax situation and the prevailing pension tax legislation at that time.
The Ordinary Pension Scheme is an option for all international staff members.
The Ordinary Pension Scheme offers flexible insurance cover and can be arranged to match your personal situation.
The scheme often includes:
Contact your pension fund for more information.
Under this scheme, your monthly pension contribution will be taxed immediately as salary according to your current tax status when it is transferred to your pension fund. This means that you will pay income tax on your pension contribution every month.
First a labour market contribution of 8% will be deducted from your salary. If you are part of the researcher taxation scheme with a flat tax rate of 27% (not applicable for PhD fellows), your remaining pension contributions (after your labour market contribution has been deducted) will be taxed at 27%. If you are subject to ordinary taxation rules, your remaining pension contributions (after your labour market contribution has been deducted) will be taxed according to your taxation status as stated on your tax card.
In return, as a general rule, your pension will not be taxed when it is paid out to you upon retirement (in contrast to the ordinary pension contribution scheme outlined above).
Furthermore, if you leave Denmark and choose to have your pension savings paid out in cash before retirement age, this payout (as a general rule) will not be taxed in Denmark.
To be eligible for the International Pension Scheme you must:
Degrees represented by Akademikerpension:
Degrees represented by Sampension:
Degrees represented by P+:
Degrees represented by PFA:
Degrees represented by Pensionskassen Arkitekter og Designere:
Some pensions schemes also include different insurance policies. AU suggests that you ask your pension fund which insurance policies you’re paying for and how much they cost – and whether they might be arranged to match your personal situation.
Pension exemption means that an amount equivalent to your pension contribution, calculated at 17.1 % of your base salary plus any pensionable supplements, will be paid out with your monthly salary. Once your payment to the Danish Group Life Insurance has been deducted (DKK 108.35 a month), this amount will be taxed according to your current income taxation status – either at 27% if you are covered by the researcher taxation scheme (not an option for PhD fellows) or at the rate specified on your ordinary Danish tax card.
To be eligible for pension exemption, you must meet the following requirements:
If your employment at the university is extended, or if you change your place of employment from Aarhus University to another university in Denmark, your pension exemption will remain in effect for a maximum total term of five years (six years if agreed with your trade union representative and your department).
The pension exemption agreement cannot be retroactive. This means that any pension contribution already made by the university to the relevant pension fund is irreversible.
Existing members of academic staff can also opt to have their pension contribution paid out as salary for the remaining part of their fixed-term employment, but only for a maximum of five years – and only if they meet the criteria described above. If you request to have your pension contribution paid out as salary, this will come into effect from the next possible salary payment. It is not possible to have contributions you have already paid towards your pension scheme refunded.
Administrative staff are not eligible for the Pension Exemption Scheme.
If you choose the Pension Exemption Scheme you will be covered by the Danish Group Life Insurance. It is mandatory by Danish law to pay into and be covered by this insurance. Read more about Group Life Insurance.
If your employment term continues beyond the five-year limit or is changed to permanent employment, your Group Life Insurance will be cancelled and pension contributions will be paid to the pension fund pursuant to the rules set out in the collective agreement.
The Pension Exemption Scheme does not include the same insurance policies as the Ordinary Pension Scheme and the International Pension Scheme. It only includes mandatory Group Life Insurance, which provides basic insurance in the event of critical illness or death. For this reason, if you choose the Pension Exemption Scheme, you may wish to consider taking out additional private insurance.
After reviewing the different options and seeking advice from the relevant pension fund or the Danish Customs and Tax Administration, you need to inform Aarhus University which pension scheme you have chosen.
Your HR department will ask you to complete the form below and to indicate your chosen pension scheme before you receive your work contract. You should return the form to your HR partner before your employment begins.
As an international member of academic staff, you need to choose between three different labour market pension schemes before you start work at Aarhus University.
We recommend that you read about the Danish pension system before you choose one of the three schemes.
Your pension is important, and AU recommends that you seek individual advice from the relevant pension fund and the Danish Taxation Authorities before choosing which pension is right for you.
AU strives to ensure that all the information provided on this webpage is correct but takes no accountability for errors or inaccuracies. As such, reading this page cannot replace seeking individual advice.
If you wish, you can pay a higher percentage of your salary into your pension fund. Ask your HR department how to do this.
If you want to amend your choice of pension scheme, please inform your HR department. They will register the change and it will take effect from the following month’s salary payment. Keep in mind that retroactive changes are not possible.
You can only change to the Pension Exemption Scheme if you meet certain requirements that relate to the time you were first recruited to an academic position in Denmark. Ask your HR supporter if it is possible for you to change to this scheme.
If you are leaving Denmark, you need to contact your pension fund. They can tell you in more detail what will happen to your pension when you leave Denmark. See the contact information on the right of this page.
You can choose to have your pension savings paid out when leaving Denmark. If you do this, the current taxation rate and administration fee is approximately 60%.
You can choose to have your pension savings paid out when leaving Denmark. As a general rule, this payout will not be taxed in Denmark because you have already paid tax on your pension contributions.
You have not built up any pension savings. Your pension contributions (which have been paid out as salary) will end along with your salary when your employment ends. You have already paid tax on these pension contributions, so the money will not be taxed further when you leave Denmark.
If you give your new address in your new country of residence to ATP (Arbejdsmarkedets Tillægspension) before you leave Denmark, they will contact you when you reach retirement age and inform you about the option of having your ATP contributions paid out.