Early retirement scheme finally concluded

A revised early retirement scheme is due to come into force in Denmark in 1999, which includes specific employee contributions towards the scheme. Following trade union pressure, the Minister of Labour has announced that the Constitution guarantees that all such early retirement payments will be refunded if the scheme is abolished in the future. While this should clear the main obstacles to parliamentary approval of the changes, some unanswered questions remain.

In November 1998, a series of amendments to Denmark's early retirement scheme were agreed by the main political parties, as part of the 1999 Budget settlement (DK9812197F). The changes include the introduction of a special early retirement contribution for employees of around DKK 300 a month, in addition to the ordinary contributions to the unemployment insurance fund, which had previously been sufficient for obtaining early retirement. In February 1999, during the final negotiations over the new scheme, the Minister of Labour,Ove Hygum announced that the Ministry of Justice had established that everyone who makes the new early retirement payments has a constitutional right to get their money back if parliament abolishes the scheme. This should clear the final obstacles to the new scheme's adoption by parliament.

This guarantee is a result of pressure from the Danish Federation of Trade Unions (Landsorganisationen i Danmark, LO), which had demanded that the parties behind the new early retirement scheme secure the repayments either by law or by a political pronouncement. In giving the guarantee, the Ministry of Justice refers to article 73 of the Constitution, which concerns expropriation and states that the right of property is inviolable. If any private property is confiscated by statute there must be full compensation. Accordingly, a refund of the voluntary payments to the early retirement scheme is guaranteed if the scheme is abolished.

The Minister of Labour believes that the guarantee will provide the necessary security in relation to the scheme. Both the governing Social Democrat and Social Liberal parties and the largest opposition party, the Liberal Democrats, declare that they are satisfied with the guarantee. Among legal experts opinions differ on the guarantee, though law professorClaus Hagen Jensen called it "as much of a guarantee as can ever be imagined". The reaction in LO was also positive, with general secretaryHans Jensen calling the guarantee an important sign to employees who had been in doubt as to whether they should contribute to the scheme or not.

The Ministry of Justice has not examined the question of refunds if the early retirement scheme is changed but not abolished. The Minister of Labour believes that there is no need for such an investigation. However, the consequences of the scheme are very uncertain. A survey carried out by the Gallup Polling Institute indicates that 22% of LO members wish to change their retirement arrangements as a result of the new pension and early retirement scheme, while some have already decided to stop payments. Hans Jensen believes that this is due to the confusion surrounding the whole issue and wants a commission to be appointed to conduct an in-depth examination of the matter and draw up some long-term suggestions. However, the Minister of Economics,Marianne Jelved of the Social Liberal Party, rejects this request, on the grounds that LO itself has sufficient resources to undertake such an analysis. Consequently, the discussion of early retirement and its effects does not seem to be over yet.