The recent pensions initiative from the Danish government and Danish People's Party, that allows workers to contribute up to DKK 50,000 into an old-age pension plan (alderspension) does not solve the so-called "interplay problem" in the pensions system, the Danish Insurance Association (Forsikring og Pension or F&P) told Danish news service Finans.

The interplay problem refers to the mechanism that effectivley prevents many low-paid workers from saving extra money for their pensions during their last years on the labor market, because the contributions will be offset against public services.

But F&P says problem isn’t solved by the initiative from the Danish government and the Danish People's Party, because contributions to retirement savings are not tax deductible, thus increasing people's taxable income ­ on which the eligibility for a number of public benefits depends.

"This only pushes the offsetting problem into the future. Many of the people for whom the age savings were intended are the same people who, for example, are living in rented housing and receive housing benefits or other public services that are available before retirement age," says chief consultant Karen Leth Jensen from F&P.

English Edit: Marie Honoré