Denmark’s pension system is being touted as a potential solution to Europe’s competitiveness challenges, offering a model for socio-economic sustainability and investment power. Ole Krogh, CEO of PFA, and Peter Stensgaard Mørch, CEO of PensionDanmark, are advocating for Denmark to leverage its EU presidency to promote awareness of the Danish pension system.

The Danish pension system is seen as a “Kinder Egg” that provides security for individuals, promotes socio-economic sustainability, and offers investment power that can benefit Europe in the global competition with the US and China. Mario Draghi’s report highlights Denmark as a role model, noting that its pension savings are nearly 200 percent of GDP, compared to the EU’s 32 percent.

Krogh emphasizes that vast sums, around DKK 75,000 billion, are sitting passively in European bank accounts. These funds could be invested to address critical challenges in defense, the green transition, welfare, and digitalization.

The Danish model is built on three pillars: the public state pension and compulsory savings in ATP, occupational pensions (like PFA and PensionDanmark), and individual pension savings. This system has been highly effective in securing Danes in their old age, with only a small percentage of pensioners living below the poverty line.

While acknowledging the challenges of replicating the Danish model across Europe, Krogh and Mørch stress the importance of creating incentives to channel some of the idle capital into investments that benefit both individuals and society. Denmark’s flexicurity model, which balances employer flexibility with a strong social safety net, has previously inspired other EU countries.

Mørch notes that the Draghi report provides momentum for promoting the Danish model. PFA has invested DKK 400 billion of its DKK 700 billion in Europe, while PensionDanmark has invested DKK 200 billion out of DKK 350 billion in Europe.