Pension and life insurance — security in the long run
Parts of the pension scheme and why pension advice requires special competence
Pension is one of the most long-term decisions a customer makes, and therefore it is a trade in itself to advise on it. Where a loan has a fixed term, a pension scheme can follow the customer through an entire working life and into retirement. This requires that you think far ahead when you advise.
§Parts of the pension scheme
- 01Occupational pension — the pension most people have paid into through their workplace
- 02Annuity pension – paid out over a number of years, typically 10-25 years
- 03Lifelong annuity — paid out as long as the customer lives, thus providing security against outliving savings
- 04Old-age savings – a smaller, more flexible savings account with different payout rules
The amount limits for how much can be paid with tax benefit to the different schemes are regulated year by year. Therefore never rely on figures you remember from before — always check the current limits with the Danish Tax Authority or the pension company before you advise specifically.
§Life insurance and critical illness insurance
Many pension schemes are linked with insurance: a life insurance that pays an amount to survivors if the customer dies and insurance for critical illness or loss of earning capacity. This is a central part of the financial security many customers overlook because they focus on savings rather than risk cover.
§Advice on pensions requires special expertise
Just as with investment advice, the rules require that you have the right competencies before you can independently advise on pension and insurance-based investment products. The rules on good practice and investor protection also apply here, and you must clarify the customer's situation and wishes before you recommend something.
| Type of pension | Payment | Typical use |
|---|---|---|
| Annuity pension | Over a period of years | Supplement for the First Years as a Retiree |
| Lifelong annuity | As long as the customer lives | Basic security throughout retirement |
| Old-age savings | Flexible often as a one-time amount | Extra buffer or one-off expenses. |
§Think far — but talk about it regularly
A pension plan laid out ten years ago rarely fits perfectly today. Salary family situation and goals change. Encourage the customer to have their pension reviewed regularly and use the opportunity yourself to discover if coverage still fits the customer's life.