Planning Ahead
Understanding folkepension
Folkepension (state pension) is the cornerstone of the Danish pension system. It consists of two parts: the basic amount and the pension supplement. Both are adjusted annually.
Grundbeloeb (Basic amount)
The basic amount is 7,544 kr/month (2026) and is paid to all state pensioners regardless of wealth and income. Since 2024, the basic amount is no longer subject to income reduction (modregning) — you receive the full amount no matter what other income you have.
Pensionstillaeg (Pension supplement)
The pension supplement is 8,729 kr/month for singles (2026). It is still subject to income reduction: for every krone you earn above the threshold of 99,200 kr/year, the supplement is reduced by 30.9%. This means pension payouts and other income sources can reduce or entirely eliminate your pension supplement.
State pension age
Your state pension age depends on your birth year. Here is the overview:
- Born before 1954: 65 years
- Born first half of 1954: 65.5 years
- Born second half of 1954: 66 years
- Born first half of 1955: 66.5 years
- Born second half of 1955 – 1962: 67 years
- Born 1963–1966: 68 years
- Born 1967–1970: 69 years
- Born 1971–1974: 70 years
- Born 1975 or later: 71 years
The state pension age is gradually increasing because it is linked to life expectancy. Check borger.dk for the exact age for your birth year.
ATP — Labour Market Supplementary Pension
ATP is a mandatory pension scheme for all employees in Denmark. You automatically pay into ATP through your salary, and your employer pays two-thirds of the contribution.
ATP pays a lifelong pension on top of your state pension. The amount depends on how much you have contributed over your working life. For most people, it amounts to 2,000–3,000 kr/month — not much on its own, but a useful supplement.
ATP is paid automatically when you reach the state pension age. You do not need to apply for it separately.
How much is enough for retirement?
A rule of thumb: aim for 60–80% of your pre-retirement income. Most people have lower expenses as pensioners — the home is paid off, the children have moved out, and you pay less in tax.
Your retirement income typically comes from three sources: state pension + ATP, employer pension, and your own savings (ratepension, aldersopsparing, free funds).
Start by estimating your fixed expenses as a pensioner: housing, food, insurance, health, transport. Add an amount for travel and leisure. Compare with your expected pension payouts — the gap is what you need to save yourself.
The earlier you start saving, the more compound interest works for you. Even small monthly amounts grow significantly over 20–30 years.
Insurance checklist
Insurance protects you against financial catastrophes. Here are the most important insurances to consider — and always check your employer pension for existing coverage before buying anything separately.
Home contents + liability insurance
Covers theft, fire and damage to your belongings. Liability insurance is typically included and covers you if you cause damage to other people or their property. This insurance is an absolute must — without liability insurance, you can be personally liable for millions.
Accident insurance (ulykkesforsikring)
Covers permanent injuries from accidents. Many employers offer this through their pension scheme — check before buying extra. Consider whether you need leisure coverage in addition to work coverage.
Health insurance (sundhedsforsikring)
Supplements the public healthcare system. Relevant if you want to avoid waiting times for treatment or want access to private specialists. Many employers offer this as a fringe benefit.
Critical illness (kritisk sygdom)
Pays a tax-free lump sum if you are diagnosed with a serious illness (cancer, blood clot, etc.). The amount is typically 100,000–500,000 kr and can be used freely. Often included in employer pension schemes.
Loss of earning capacity
Secures your income if you lose the ability to work. Typically pays a percentage of your salary. This insurance is crucial if you have fixed expenses like a mortgage. Often included in employer pension schemes.
Life insurance (livsforsikring)
Pays an amount to your survivors if you die. Important if your partner or children depend on your income — especially if you have a joint mortgage. The need typically decreases as children grow older and debt is paid off.
Car insurance (bilforsikring)
Liability insurance is mandatory for all car owners. Comprehensive insurance (kasko) is optional and covers damage to your own car. Consider whether the car's value justifies comprehensive insurance — for older cars, it can often be skipped.
Travel insurance (rejseforsikring)
The European Health Insurance Card (EHIC) covers emergency treatment in the EU/EEA. For travel outside the EU or for better coverage, you should get private travel insurance. Many credit cards include basic travel insurance.
Always check your employer pension and any union membership for existing coverage before buying insurance on your own. Many people already have coverage they are not aware of.
Family finance basics
Family life brings new financial challenges and opportunities. Here are the key things to know.
Child and youth benefit (boerne- og ungeydelse)
The child and youth benefit is tax-free and paid quarterly. Rates for 2026:
- Age 0–2: 21,480 kr/year (5,370 kr/quarter)
- Age 3–6: 17,004 kr/year (4,251 kr/quarter)
- Age 7–14: 13,380 kr/year (3,345 kr/quarter)
- Age 15–17: 13,380 kr/year (4,460 kr/month)
The benefit is paid automatically by Udbetaling Danmark. For cohabiting and married couples with high incomes, the benefit may be reduced.
Parental leave (barsel)
A total of 48 weeks of parental leave with benefits, split 24 weeks per parent. 11 weeks are earmarked for each parent and cannot be transferred. The remaining 13 weeks per parent can be freely distributed between the parents.
Many employers supplement parental leave benefits with full pay for part of the period — check your employment contract or collective agreement. Remember that pension contributions are typically also reduced during parental leave.
Gift tax (gaveafgift)
You can give up to 80,600 kr tax-free to your children and grandchildren per year (2026). Amounts above this are taxed at 15% gift tax. From 2027, you can also give tax-free to siblings.
The gift tax threshold applies per giver per recipient. This means two parents can give 161,200 kr tax-free to each child per year. A useful tool for transferring wealth to the next generation.
Estate and inheritance basics
Nobody likes thinking about it, but it is important to have your estate planning in order — especially if you have an unconventional family situation.
Will (testamente)
A will is especially important if you live with an unmarried partner, have blended families, or want to distribute your estate differently than the inheritance law dictates. Without a will, an unmarried partner inherits nothing.
There are three types of wills in Denmark: notarial will (stored at the court), witnessed will (two witnesses), and personal effects will (only for personal belongings). A notarial will is the most secure and costs about 300 kr.
Estate tax (boafgift)
When you inherit, estate tax is paid on the inheritance. There is a basic deduction of 392,300 kr (2026), which is shared among all heirs. Inheritance above the deduction is taxed at 15% for close family (children, grandchildren, parents).
Spouses are fully exempt from estate tax — they inherit tax-free. For more distant family members and non-family members, an additional 25% surcharge is applied on top of the 15%, totalling about 36.25%.
Beneficiary designations on pension and insurance
On your pension schemes and life insurance policies, you can designate a beneficiary — the person who receives the payout if you die. This is important because the beneficiary designation bypasses the estate and will.
Check and update your beneficiary designations regularly — especially after life changes such as marriage, divorce or children. The default designation is typically 'nearest relative', but that is not always what you want.