Age savings came as a replacement for the Capital Pension Scheme, when this was abolished.
The new scheme in the form of retirement savings got a little tough start, as many were happy about their capital pension and skeptical that payments to the new scheme do not provide tax deductions. Many, however, are really happy about their age savings today, now that they know its benefits.
There is a difference in age savings and capital pension
Age savings are very similar to the capital pension. However, there are 3 points where it differs:
- There can only be paid DKK 28,600 (2015) on it per year.
- Deposits are not deducted from tax.
- Payments on a retirement savings tax free.
It is said that the retirement savings are a capital pension without tax intervention!
Creating age savings
You can create a retirement savings until 15 after you reach your retirement age. You can deposit on your retirement savings even if you have received a payment.
How can age savings be paid?
You choose whether you want the money paid as a lump sum or in smaller portions up to 15 years old when you retire.
It is one of the points where the old-age pension differs from the other two forms of savings that are today, namely rate pension and annuity, in these types of savings one cannot get their savings paid out at once, but only in installments over at least a 10-year period (installment pension ).
Most people today have either a rate pension or an annuity via their company pension and in that case it can be a huge advantage to have a retirement savings next to them, so you secure both an ongoing payment and a large one-off amount when you retire.
Age savings – taxation
As mentioned, the payments on an age savings cannot be deducted from your taxable income. On the other hand, the payment at retirement age is tax-free and tax-free, which means that you get the entire savings value paid.
In 2015, a maximum of DKK 28,600 can be paid and you can deposit one or more times. The maximum deposit amount is regulated each year.
If you pay more than DKK 28,600 in 2015, you must pay 20% in tax on the amount exceeding DKK 28,600. The amount paid too much will remain on the scheme. The tax is charged by SKAT via your annual statement.
Alternatively, you can benefit from paying the excess amount on an installment pension or annuity.
Location of retirement savings
Age savings can be placed in several ways
- Leave the money in an account where you get some return (which is very low as the times are today)
- In the investment pools that are cared for by either the bank’s or the pension companies’ investment specialists
- In your own securities deposit where you can invest in ex. Shares, bonds and mutual fund certificates
Tax on your pension return
The return on the savings amount must not be included in the calculation of the taxable income. Returns are taxed only at 15.3 per cent per share. year (2015).
As long as no payment has been made, the age savings are exempt from creditor proceedings. However, special rules apply to account holders who are declared bankrupt.