Mandatory retirement clauses are now illegal
In Denmark, employers are no longer permitted to include a mandatory retirement age in new or individual employment contracts. This change, effective since January 1, 2016, voided any such clauses that previously existed in personal agreements, ensuring workers cannot be forced to retire based solely on their age. The amendment was part of a broader effort to align Danish law with EU directives prohibiting age discrimination.
There is one key exception: clauses in collective agreements established before December 28, 2004, may still be valid, provided they are objectively and reasonably justified. For example, a mandatory retirement age for opera singers has been considered justified due to the natural changes in the voice over time.
The rising state pension age
While employees cannot be forced out, the age at which Danes can claim their state pension (Folkepension) is increasing. In 2006, the government introduced a reform to link the state pension age to life expectancy. This has led to gradual increases over time to ensure the long-term sustainability of the pension system.
Here is a timeline of the changes to the state pension age:
- In 2025, the state pension age for Danes is 67.
- By 2030, it is scheduled to increase to 68.
- In 2035, it will rise to 69.
- For those born after December 31, 1970, the state pension age will be 70 in 2040.
These ongoing adjustments are based on a system that is reviewed by the Danish Parliament every five years. The decision to increase the age is a proactive measure to secure public finances as the population ages and life expectancy increases.
Options for early retirement
Despite the rising state pension age, Denmark offers several pathways for early retirement for those who qualify, providing flexibility for those who can or need to leave the workforce sooner.
Early Retirement Pension (Efterløn)
The Efterløn scheme is an insurance-based system that allows eligible members of an unemployment insurance fund to retire up to three years before the state pension age. To qualify, you must have been a member of an unemployment insurance fund and have paid Efterløn contributions for at least 30 years. The exact age you can start receiving this benefit depends on your date of birth and your total number of years in the labor market.
Senior Pension
The Senior Pension is a specific early retirement scheme for workers with long and physically demanding careers who have reduced work capacity due to poor health. To be eligible, a medical practitioner must assess the individual and deem them permanently incapable of working more than 15 hours per week in their current or most recent job. This option allows certain individuals to retire up to six years before the normal state pension age.
Comparison of Danish Retirement Options
| Feature | State Pension (Folkepension) | Early Retirement Pension (Efterløn) | Senior Pension |
|---|---|---|---|
| Funding | State-funded, universal benefit | Insurance-based system requiring paid contributions | State-funded, for qualifying individuals |
| Eligibility Age | Phased increase to age 70 by 2040, based on date of birth | Can be taken up to three years before state pension age, depending on seniority | Up to six years before state pension age, for those with reduced work capacity |
| Primary Condition | Reaching the statutory retirement age | Long-term membership and contribution to an unemployment insurance fund | Medically certified reduced work capacity after a long career in demanding work |
| Can you work? | Yes, though income may affect the benefit amount | Yes, but income from work is subject to limits | Limited to less than 15 hours per week |
Protections against age discrimination
Beyond the prohibition on mandatory retirement, Denmark has robust anti-discrimination laws protecting older workers.
Legal protections
- Discrimination Act: The Danish Discrimination Act was amended in 2004 to prohibit both direct and indirect discrimination in the labor market based on age.
- Recruitment: Since July 2022, employers are prohibited from asking job applicants to state their age during the application process, which helps prevent age-based screening.
- Dismissal: It is considered unlawful to dismiss an employee on the basis of their age. An employee who can show evidence suggesting their age was the reason for termination can shift the burden of proof to the employer.
Challenges for older workers
Despite these protections, age discrimination remains a persistent issue in the Danish labor market. A 2022 poll by senior citizens' lobby group Ældre Sagen found that a significant number of retirees over 60 felt they had retired unwillingly due to limited opportunities for older workers. Many older Danes would prefer to continue working but seek more flexible arrangements, such as part-time hours. Efforts are ongoing to change the cultural perception of older workers and promote the value of their experience and skills.
Conclusion
In summary, Denmark does not have a mandatory retirement age for employees. This has been a legally protected right since 2016 for those with individual contracts, with age discrimination being unlawful in recruitment, employment, and dismissal. However, the age at which Danes become eligible for the state pension is gradually rising to 70 by 2040, a measure linked to increasing life expectancy. For those who wish to retire earlier, Denmark provides flexible options through schemes like the Early Retirement Pension (Efterløn) and the Senior Pension, which offer pathways for those with long careers or health issues. While legal protections are in place, cultural shifts and addressing persistent age discrimination remain important for ensuring that older Danes can continue to participate in the workforce for as long as they desire.
