Many will probably think sothat they have served their tax-related military service with a withdrawal percentage of 42 or 44 depending on the municipality, but this is a pittance compared to pensioners who remain in a highly paid position after the age of 67. For this group, a tax rate of 42-44 + a curtailed employment deduction + a reduction in the retirement pension of 40 percent will result in a total tax burden for the last kroner earned of 88-90 percent. (Explanation follows).
Naalakkersuisut is currently sending a questionnaire to 4,000 randomly selected citizens, who will be asked about their knowledge and experience with the pension system.
Many will probably think sothat they have served their tax-related military service with a withdrawal percentage of 42 or 44 depending on the municipality, but this is a pittance compared to pensioners who remain in a highly paid position after the age of 67. For this group, a tax rate of 42-44 + a curtailed employment deduction + a reduction in the retirement pension of 40 percent will result in a total tax burden for the last kroner earned of 88-90 percent. (Explanation follows).
Naalakkersuisut is currently sending a questionnaire to 4,000 randomly selected citizens, who will be asked about their knowledge and experience with the pension system.
Answers matter
In the course of time, the current pension system has emerged as a piece of cake, and many pensioners get lost in the legal jungle. An expert group, which Naalakkersuisut set up in January, presents its recommendations for the future pension system at the beginning of the new year.
The 4,000 responses from the questionnaire survey weigh heavily in the reform work towards a simplified and comprehensible system – not least for the pensioners. The chairperson of the expert group, Maliina Abelsen, encourages the 4,000 participants to answer the questionnaire.
– Citizens’ views and experiences are a very important basis for our work, and the answers will be important for our final recommendations, promises Maliina Abelsen.
A hundredfold is worth DKK 14.70
One of the questions is about pensioners’ options to remain on the labor market in whole or in part after the age of 67. A question that is becoming more and more urgent in light of the increasing number of pensioners, the decreasing number of working people and the massive immigration due to a lack of labour.
According to the current legislation, a single pensioner has the pension supplement cut by 35 percent when the income exceeds DKK 168,844, and the basic pension by 40 percent when the income exceeds DKK 421,416.
An income above these amount limits is hit by the perfect storm, where personal tax, reduced employment deductions and reduced pensions end up with a total tax burden, also called marginal tax, which can take the will to work from even the best pensioner. (The tax technical term “marginal tax” covers the taxation of the last kroner earned).
Naalakkersuisut emphasizes in his terms of reference for the pension reform that our pensioners should not be penalized for remaining on the labor market, but the expert group has in its mid-term report “Safe old age” made a calculation for a single pensioner with an income of DKK 400,000 in addition to the pension. If this pensioner earns an additional 100 kroner, the total tax burden on the last hundred lap will be 83.3 – 85.3 percent.
The calculation looks like this: DKK 42-44 is deducted in tax depending on the municipality, the employment deduction is lowered by DKK 6.30, and the pension supplement is phased out by DKK 35. The pensioner thus gets 14.70 or 16.70 kroner more in disposable income after a wage income of 100 kroner.
A and B teams
Maliina Abelsen recognizes that the overall effect of the individual rules can be difficult for citizens to understand: – In some cases, it can weaken the motivation to work after the age of 67.
In its further work, the expert group will investigate how tax, employment deductions and phasing out of the old-age pension work together for the individual families and incomes. At the same time, it is being investigated whether the rules can be made simpler and more transparent, without, however, weakening the social objective of the old-age pension to benefit pensioners with low or no income in addition to the pension.
The old saying “Better rich and healthy than sick and poor” also applies in Greenland. It can reasonably be argued that removing the phasing out rules will create an A team of healthy pensioners and a B team of decrepit elderly. Today, most are also covered by other pension schemes, including mandatory pension and collective agreement pension.
The questionnaire survey asks the 4,000 respondents to assess how much they agree with the statement: – You should receive less in public pension if you also have income from work or other pensions.
The answer options range from ‘completely disagree’ to ‘neither agree nor disagree’ to ‘completely agree’ and ‘don’t know’.
SIK: – Do like Denmark
The marginal tax for pensioners on the labor market peaks at 90 percent for incomes between DKK 450,000 and DKK 500,000.
Today, only a few pensioners earn around half a million. There is no study of the reason for the very small number of half-millionaires among pensioners, but the towering marginal tax of 90 percent may make the gray gold enjoy its retirement instead of nodding it an extra shell.
– Naalakkersuisut has not analyzed whether the phasing limits cause pensioners to opt out of work or reduce working hours, informs naalakkersuisoq for finance Aqqaluaq B. Egede.
But the employee organization SIK’s chairman Jess G. Berthelsen has no doubts.
– Many of our members who have turned 67 would like to continue in the labor market, but refrain from taking a job because of the phasing-out rules. It affects all of us; it goes beyond the whole society. We are in a situation where we are going to lack labour, and it is foolish to punish people who want to work. Therefore, the phasing-out rules must be completely removed, so that we reward pensioners for staying on the labor market for a while longer, says Jess G. Berthelsen’s call.
At the same time, he points to the experiences from Denmark, where there are currently 1,175,187 public pensioners.
In 2023, the Danish offset in the old-age pension for earned income was abolished, and ever since then the number of pensioners in the labor market has exploded. In June 2023, 68,221 state pensioners were still in work – in June 2026, this applied to 98,984 state pensioners. An increase of 45 percent, which is primarily attributed to the abolition of the phasing-out rules, so that Danish pensioners are no longer taxed to go to work.
