DENMARK - New proposals by ATP, Denmark's first pillar scheme, to cover an estimated one million employees or the 20% not covered under labour market pension schemes in the second pillar, have sparked a row in Denmark.
ATP’s CEO Lars Rohde said that employees not covered under any labour market scheme should have a mandatory saving of at least 5% of average salary. Employees should also be able to decide which scheme to opt for and in cases where they are unable to decide, ATP could act as a default scheme.
In the past, suggestions to allow ATP to compete for assets in the second pillar have met with furious opposition from labour market schemes.
Recent comments too have angered labour market schemes, which claim that any move to commercialise the ATP would result in unfair competition and would be unfair to the rest of the industry.
“The ATP is claiming that there are some 20% of employees not covered under labour market schemes. But we think that figure is way off the mark,” said one senior pension fund source.
“In the age groups of 20-60, there are 460,000 people outside second pillar cover; nowhere near the one million mark.
“And even with these people, many of them do have some kind of pension cover either through workers’ compensation schemes or insurance companies. ATP’s argument has not been well thought out and there is absolutely no analysis of figures,” he added.
Chresten Dengsoe, chief actuary at ATP agreed that the second pillar was likely to make that argument.
“In a sense, the first, second and third pillars are likely to compete with each other in the future.
“Around 80% of employees belong to some kind of labour market scheme and get a good pension. But the 20% not covered under these schemes don’t have any kind of regular savings at all. If we do nothing, a selection of the population will be in a very bad situation compared to the rest of the population,” he said.
At the end of last year, a senior government official said that there was a “certain will” to liberalise the ATP provided the issue of creating a level playing field was resolved. A government committee is examining whether it is technically possible to allow ATP to become a commercial player.
Partner Insight: In recent years, pensions administrators have seen scheme member engagement increase significantly. The advent of pension freedoms in 2015 and the increased choices faced by members have led to a sea-change in the levels and types of...
The Pension Protection Fund (PPF) and The Pensions Regulator (TPR) are probing the sale of Johnston Press as concerns are raised over the impact on the publishing house's pension fund.
The Co-operative Group's pension scheme, Pace, will invest up to £50m into the social and affordable housing market over the next 12 months.