Rate pension 2026

Rate pension 2026

My assets in ratepension and livrente (annuity pension) are:

491,000 DKK

The ratepension makes up 376,400 DKK

Ratepension is one of the classic pension types in Denmark. It’s quite common for your employer to pay into it, and for you to be required to contribute via your salary. You can also contribute yourself if your employer doesn’t require it or if you want to pay in more. Returns on the pension are taxed at the low PAL tax rate of 15.3%.

The pension is paid out in installments over 10 to 30 years.

You can contribute up to a limit that’s adjusted every year. In 2026, it’s 68,700 DKK.

You get a full tax deduction for the amount you contribute, which matters a lot for the top tax bracket and the additional top tax bracket.

The payout counts as personal income and is therefore taxable, and it’s offset against social benefits.

The tax deduction can also provide motivation here and now, making it more attractive relative to family, house, kids, or whatever other expenses people are dealing with. The tax hit comes in the future, and people tend to undervalue that relative to the present.

And I won’t argue much against that either.

I’ve maxed out my own contributions to the limit for a number of years. I’ve done this even though I haven’t hit the high tax brackets in those years. One reason is the low tax on gains. Another is that I believe having more pension types gives more options and therefore more flexibility. And it should be said that it’s worked out that I’ve hit the limit through the mandatory contributions in several of those years.

But there are still some things nagging at me that make me uncertain whether I’d chase the limit quite as religiously if my employment situation were to change. I’ll go into that in more detail in the next article.