Taxes on banks and the rich to pay for Danish retirement scheme

18 Aug 20

Denmark will tax banks and its richest citizens to pay for an early retirement scheme for physical labourers.

 

The government said that with people living longer, they should also work for longer, but recognised “imbalances” in the system.

Around one-in-three people aged 55 to 64 say they experience pain that limits their ability to work, and people in this category also go on to die earlier than other people, according to the Danish finance ministry.

“They must be able to retire before the pain becomes too strong or the work too hard,” said minister for employment Peter Hummelgaard.

“They should get some good years as a retiree after having worked hard and paid taxes for so many years.”

The right to early retirement is based on the number of years spent in the labour market until the age of 61: if a person has worked for 44 years, they can retire three years before the national pension age (currently 65, but this is set to increase to 67 by 2022), while 43 or 42 years of work will allow them to retire two years or one year early respectively.

Coming into effect in 2022, 38,000 people are expected to meet criteria allowing them to retire.

The government expects the move to cost three billion krone (£360m), and will pay for it by rolling back tax breaks for the very highest earners and taking a “social contribution” from the financial sector.

“We want the financial sector to contribute more to the community,” said minister of taxation Morten Bødskov.

“During the financial crisis, Danish society held its hand under the financial sector. In recent years, the sector has had billions in profits, and an extra contribution to society is therefore completely in place.”

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