International academic staff members have 3 different options of pension scheme.
You need to decide which scheme you wish to be on before starting your work at Aarhus University.
According to the collective agreement that covers all academic staff, the university will transfer a monthly pension contribution to the relevant pension fund calculated at 17.1 % of the base salary plus pensionable supplements.
Your pension contributions under the pension scheme are made with the intention of saving capital for your future and as an insurance policy that comes into effect from the first day of your employment.
In Denmark, 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 for your pension savings to be paid out.
If you choose to take out your pension savings when your employment ends, the current taxation rate and administration fee is approximately 60%. If you choose to take out your pension savings when you reach the age of retirement, the taxation rate will depend on your tax situation and the prevailing pension tax legislation at that time.
The insurance cover in relation to the ordinary pension contribution is flexible and can be arranged to match your personal situation.
For more information, you will need to contact your pension fund.
Under this scheme, the university will transfer a monthly pension contribution to the relevant pension fund, calculated at 17.1 % of your base salary plus pensionable supplements.
However, when the pension contribution is transferred to your pension fund every month, it will be taxed immediately as salary according to your current tax status. This means that every month you will pay income tax on the monthly pension contribution.
First, you will be taxed 8 % as a labour market contribution. If you are under the researcher taxation scheme with a flat tax rate of 27% (not applicable for PhD fellows), the remaining pension contributions (after the deduction of the labour market contribution) will be taxed 27%. If you are under the ordinary taxation rules, the remainder of the pension contributions (after the deduction of the labour market contribution) will be taxed appropriately according to your taxation status as stated on your tax card.
In return (and as a rule), there will be no tax charge when your pension fund pays out your pension savings at retirement, in contrast to the ordinary pension contribution scheme outlined above.
Furthermore, if you leave Denmark and choose to have a cash pay-out of your pension savings before retirement, this payment will not be subject to government duties.
However, if, due to special circumstances, you do not pay tax to the Danish state on the transferral of pension contributions to an International Pension Scheme according to section 53 A, and you retire in Denmark, you must expect that the payments from the pension fund at retirement will be taxed.
It is possible for some international researchers employed by the university to be exempted from paying pension contributions. If you choose pension exemption you will be covered by the Danish State Group Life Insurance. Read more about the Group Life Insurance Scheme (pdf)
Pension exemption means that an amount equivalent to the pension contribution, calculated at 17.1 % of your base salary plus pensionable supplements, will be paid out together with your monthly salary. In relation to PhD fellows, an amount equivalent to the pension calculated at 17.1 % of 85 % of your basic salary will be paid out together with your monthly salary. After deduction of the Danish state group life insurance premium (monthly DKK 108.35), this amount will be taxed according to your current income taxation status, whether you are covered by the researcher taxation scheme of a flat rate of 26 % (not eligible for PhD fellows) or taxed on the basis of an ordinary Danish tax card.
If your employment as a researcher at the University is extended, or if you change your place of employment from Aarhus University to another Danish university, the 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.
If the employment term continues beyond the five-year limit or if the employment term is changed to permanent employment, a choice, if any, of group life insurance will be cancelled and pension contributions will be paid to the pension fund pursuant to the rules thereon set out in the collective agreement.
Existing members of academic staff can also opt to have the pension contribution paid out as salary for the remaining part of their fixed term employment; however, for a maximum of five years. A decision to have the pension contribution paid out as salary will come into effect as of the next possible salary payment. Existing employees choosing to have the pension contribution paid out as salary do not have the option of having contributions already paid towards the pension scheme refunded.
International administrative staff members cannot opt to have their pension contribution paid out as salary.
Please be aware that pension exemption does not include the same insurance as the Ordinary Pension Contribution Scheme and the International Pension Scheme according to Section 53 A of the Pension Taxation Act.
For more information see Government circular of 17 June 2016 on pension exemption (in Danish).
Your HR department will ask you which scheme you wish to be on before you receive your work contract. They will ask you to fill out a form to choose pension schemes. The form should be filled out and returned to your HR partner before your employment begins.
If you choose pension exemption instead of the ordinary pension contributions, you should be aware that you will not benefit from the insurance coverage that comes with the ordinary pension scheme. It is therefore advisable that you consider taking up additional private insurance. You will only be covered by the mandatory group life insurance policy, which provides basic insurance in the event of critical illness or death.
You should also keep in mind that by using the pension exemption scheme you will not be making any savings towards your retirement.
If you choose one scheme and want to amend your choice at a later date, you must inform the relevant HR department. They will then register the change, which will take effect from the following month’s salary payment. Keep in mind that retroactive changes are impossible. You can only change if you meet the following requirements:
Pension is a very important matter, and AU recommends that you obtain individual counselling from the relevant pension fund and from the Danish Customs and Tax Administration (the Danish Taxation Authorities) regarding your pension taxation based on your specific, individual circumstances.
Upon reviewing the different options, you are requested to inform the university which option you wish to make use of. Please note that there are certain requirements you must meet in order to be eligible for the different schemes.
The information about pension schemes on this page does not constitute and cannot replace individual legal counselling. AU strives to ensure that the information about pension schemes provided here is correct, but takes no accountability for mistakes or deficiencies.
If you have questions about your pension, 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 of the pension funds on the right. Below is some overall information about pension and tax when leaving Denmark.
You can choose to take out your pension savings when leaving Denmark. If you do this, the current taxation rate and administration fee is approximately 60%.
You can choose to take out your pension savings when leaving Denmark. This payment will not be subject to government duties, because the pension contributions have already been taxed as ordinary income.
You have not earned any pension, and the contribution will end along with your salary, when your employment ends. The contribution is subject to ordinary income tax and, thus, the money will not be taxed further when you leave Denmark.