Danish media, citing the Ritzau news agency, reported that the state pension, i.e., the pension for the elderly in Denmark, will rise next year to more than two hundred thousand kroner annually for the first time. A single pensioner who is entitled to the full pension will receive 200,940 kroner before taxes in 2027, while an «elderly allowance» of up to 26,900 kroner may be added to that.
More than one million government retirees will benefit from the increase.
The Danish Ministry of Finance announced the value of the new increase in social transfers, including pensions, after setting the pension regulation rate for 2027 at 2.6 percent, with an additional 0.3 percentage point for pensioners as a result of the cancellation of the «Satz Polie» funds.
An increase of nearly 20 percent over five years
Danica's chief economist, Mads Moberg Reumert, said that the state pension has increased by more than 32,000 kroner, or nearly 20 percent, over the past five years.
He added that the large increase in pensions could help large numbers of retirees in the country, many of whom have been affected by rising prices in recent years.
Romert explained that government retirees have in many cases stopped working, and therefore may find it difficult to provide additional funds to cover daily living expenses when prices rise, according to the source.
The mechanism for the increase depends on wages.
The pension adjustment rate is determined based on wage growth in the private sector, but with a two-year delay.
This delay meant that retirees remained behind wage earners in terms of increases for a while, but part of the difference was made up last year, when pensions rose by 4.8 percent, as a result of the wage increases the country had recorded two years earlier.
Purchasing power has not fully recovered to its 2021 level.
Despite recent increases, the purchasing power of retirees has not fully recovered when compared to the level it was at in 2021, when inflation was still largely stable.
Romert said that the time lag built into the pension regulation mechanism may soon be a thing of the past.
The government is considering accelerating the mechanism for increasing pensions.
Romert explained that the government's program includes a proposal to improve the pension regulation mechanism, with the aim of making adaptation to price changes faster during periods of rising prices.
He said he is waiting to see what the future model of this mechanism will look like.
Under the new increase, the maximum annual state pension for a single retiree receiving their full pension will reach 200,940 kroner before taxes in 2027, and beneficiaries can also receive an «old people’s grant» worth 26,900 kroner.
