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The different pension schemes work in different ways. On Min pension you can read more about your pension scheme.

The deposit interest rate added to your pension savings is determined on basis of the the return. The size of the paid pension benefits is among other things determined according to a a calculation interest rate which is determined on basis of the long-term return that P+ expects to generate.

 

If the actual return at year-end is higher or lower than the calculation interest rate, the pension benefits for the following year are adjusted. The change does not impact your benefits until the following year because the deposit interest rate must be realised before it can be included in the payments. 

 

It is thus the 2021 deposit interest rate which is decisive to your pensions benefits this year. And the 2021 return, which the 2022 deposit interest rate is based on, does not impact your benefits until 2023.

 

You can see your pension and benefits on Min pension

 

General information about payment of insurance and pension benefits
On the pension statement you can see your insurance and pension covers which are adjusted continually on basis of your savings and contributions. It applies to pension schemes in payment that the insurance and pension benefits are normally adjusted annually on 1 January. 

For pension schemes under P+ Life cycle and MemberFunds as well as market rate schemes under P+, former DIP and P+ 2019 the size of the adjustment depends on the development of the pension savings. 

For pension schemes with an average interest rate the adjustment may imply that insurance and pension benefit are either higher or lower than stated on the pension statement. 

If you have a pension scheme under P+ Life cycle, calculation of your pension includes the following factors:

  • Return and calculation interest rate
  • Longevity and future changes in longevity
  • Administrative costs
  • Costs related to insurance and pension guarantee

 

These factors impact the development of your total pension. If the factors included in the total pension correspond with reality, the pension remains unchanged. A possible deficit compared to what has already been included in the pension results in a negative adjustment, while a surplus results in a positive adjustment of the pension. The assumptions for calculation of the total pension can be changed by the Board. 

 

The determining factors for both negative and positive adjustments of the pension is the pre-tax return compared to the calculation rate and longevity trends. 

 

Your pension savings are continually added return based on the development of the value of the assets which your savings are invested in. You carry the full investment risk, and the return can be either positive or negative. You pay the costs related to investing your savings. The costs are deducted from the return before it is added to your savings. 

 

The return on investments have an impact on your pensions, both while your are saving up and when they are paid. This applies to the following pensions:

  • Lifelong retirement pension
  • Annuity certain
  • Retirement insurance
  • Endowment policy

 

It applies to pensions is in payment that an expected return of 2 percent is included. This implies all else being equal that the actual return must exceed 2 percent in order for the pensions to increase. 

On the pension statement, which you can find on Min pension, you can see if your pension statement includes MemberFunds.


Normally, the size of the benefits is determined annually and can be changed or discontinued. The principles applying to MemberFunds are determined by the Board on basis of the market and the pension fund's financial situation.


Interest on MemberFunds is paid at the rate of the pensions fund’s return on investments of the investment profile P+ Balance. You can read more about investments and return on investments here. You can read more about MemberFunds here

Below, you can read how the pension is adjusted – both while you are saving up and when the pension benefits are paid.

 

This applies to all pension schemes under the following Regulations: 

  • P+ Regulations 2019
  • P+ Regulations 2011, former DIP Regulations 4
  • P+ Regulations 2007, former JØP Regulations 2 and the following pension products in P+, former JØP: annuity certain, retirement insurance, Pension Udland, Ratepension Udland and supplementary retirement pension (Regulations 2).


Calculation of the pension benefits, both while you are saving up and when the pension benefits are paid, is based on below-mentioned factors:

  • Calculation rate and deposit interest rate
  • Longevity and future changes to longevity
  • Administrative costs
  • Costs related to insurances – including a possible group insurance premium 
  • Possible contributions and benefit payments.


These factors impact the development of your total pension. If the factors included in the total pension correspond with reality, the pension remains unchanged. A possible deficit compared to what has already been included in the pension results in a negative adjustment, while a surplus results in a positive adjustment of the pension. The assumptions for calculation of the total pension can be changed by the Board. 

 

The determining factors for both negative and positive adjustments of the pension is the pre-tax return compared to the calculation rate and longevity trends. 

 

The calculation interest rate
The total pension includes an interest rate (the calculation interest rate) which reflects the expectations to the long-term investment return on the pension fund’s investment portfolio. All else being equal, this means that the deposit interest rate must exceed the already included calculation interest rate if the pension benefits should increase.


You can read more about the calculation interest rate here


This applies both while you are saving up and when the pension benefits are paid. It applies to the following types of pensions:

  • Permanent and temporary disability pension
  • Lifelong retirement pension
  • Spouse’s or cohabitant’s pension
  • Children’s pension
  • Annuity certain in P+, former JØP


Deposit interest rate
In general, the Board determines the deposit interest rate ince annually at year-end on basis of the pension fund's financial situation at the beginning of November. The deposit interest rate is the annual interest payment to the members' deposits when they have an average rate pension scheme. 


You can read more about the deposit interest rate here


Longevity

We live longer, and especially the well-educated people can look forward to a more healthy and active life when they get on in years.


The pension fund assesses the life expectancy of its members according to the Danish Financial Supervisory Authority’s so-called longevity benchmark.


When the life expectancy is adjusted, it impacts on the total pension – more precisely the non-guaranteed supplementary pension. Seen in isolation, an expected improvement in the life exectancy will imply a modest reduction in pension benefits as they must last longer.


You can read more about the supplementary pension here

Below, you can read how the pension is adjusted – both while you are saving up and when the pension benefits are paid.

This applies to all pension schemes under the following Regulations: 

  • P+ Regulations 1983, former DIP Regulations 1
  • P+ Regulations 1999, former DIP Regulations 2
  • P+ Regulations 1973, former JØP Regulations 1 and supplementary retirement pension under P+ Regulations 1973, former JØP Regulations 1.


The pension benefits in these schemes include a guaranteed benefit which means that you are guaranteed a minimum benefit on payment. This applies to payment of:

  • Permanent and temporary disability pension benefits
  • Lifelong retirement pension benefits
  • Spouse’s pension benefits
  • Spouse’s or cohabitant’s pension benefits
  • Children’s pension benefits


Basic interest rate
Your pension benefits are calculated according to the basic interest rates applying at the time when the pension contributions were paid and at the time when bonus was used for buying new pension benefits. This means that your total pension benefits are calculated according to several different bases.


You can read more about the basic interest here 

Interest on market rate pension schemes is paid at the rate of the return of the chosen investment profile. Interest is paid with one month’s postponement – e.g. interest for December is paid in January next year.


You can see the return on investment profiles here

 

During payment, the pension benefits are calculated in present value. This means that we have allowed for inflation, and it is the actual purchasing power that is stated. This makes it possible to assess how the purchasing power of the pension benefits will develop. Accordingly, we have allowed for that DKK 100 is not worth the same in 5 years as today.


The payment course must as a standars show the first year of payment as well as the 5. and 15. year. If  a pension is discontinued, e.g. an annuity certain after 10 years or MemberFunds (15 years) after 15 years, we will also show a pension forecast for the last year the pension in question is paid as well as the year after the payment is discontinued. 


You can find the Assumptions for calculation of pensions here


Already included interest rate
In many pension schemes with a deposit interest rate we have already included an interest rate in the calculation of the pension benefits. This may be a basic interest rate or a calculation interest rate. This means that all else being equal the pension benefits can only increase when the deposit interest rate and forecasted interest rate exceed the already included interest rate. You can read more about the basic interest rate and calculation interest rate here

 

Below-mentioned factors also impact the adjustment of your pension benefits.


Uncertainty about calculation of your pension benefits
The payment with expected return (forventet afkast) is our best estimate of the size of your pension benefits when you retire. The calculation is based on some key assumptions and average considerations about return, inflation, life expectancy and taxation. We cannot precisely predict how these assumptions develop, and consequently we cannot precisely predict the size of the benefits.


Uncertainty about the return on investments
To give you an idea about the uncertainty, we also calculate the benefits on basis of a high and a low return respectivecly. The two figures show your benefit payments if the financial markets develop better or worse than expected. Your payment will most likely (90 percent) end somewhere between the two. Only the uncertainty about the development on the financial markets is included in payment based on a high and low return respectively. Uncertainty about inflation, tax rules, life expectancy etc. is not included. Read more about the method of calculation and the forecast here