Which option suits you best?

Which option suits you best?  

For some, it may make sense to combine a larger amount of their pension savings in market rate, while for others, staying in average interest rate may be the better option. 

That is why it is important to base your decision on your own pension savings, the time you have until retirement and your attitude regarding investment risk. On this page, you can learn more about the key factors to consider before making your decision.

  

 

Read about the differences

What is the difference between average interest rate and market rate
– and what is transfer allowance? 

Average interest rate and market rate are two different ways to save for retirement. 

With average interest rate, your savings come with guaranteed benefits. The guaranteed benefits ensure you a minimum payout regardless of how market conditions, life expectancy and costs develop. 

In market rate, your savings are invested so that they follow developments in the financial markets. This offers the potential for higher returns over time, but also greater fluctuations in the value of your savings and therefore in your payouts. Market rate plans do not include any guaranteed benefits or guaranteed minimum payout.

What is the reason for transfer allowance?

If you choose to transfer your savings from average interest rate to market rate, in some cases transfer allowance may be added to your savings. The transfer supplement is compensation for giving up the guaranteed benefits attached to average interest rate when you make the transfer. 

The option of transfer allowance will cease on 28 December 2026. Hereafter, it may still be possible to transfer savings to market rate, however without transfer allowance. 

Not all plans allow savings to be transferred, and not all customers qualify for transfer allowance. Therefore, your options depend on your specific pension plans and pension conditions. 

As a general rule, PFA recommends market rate, because in the long term it gives the opportunity for a higher return. However, the level of risk is also higher. That is why it is important to be aware that market rate is not necessarily the right choice for everyone.  

Questions and answers

Questions and answers

Here you can find answers to the questions we are most frequently asked about average interest rate, market rate and transfer allowance.
  

1. What is average interest rate?

 
Average interest rate is a type of pension savings that comes with guaranteed benefits. 
 
Guaranteed benefits mean that you are guaranteed a specified payout as a minimum – regardless of how the markets develop. If you have a life pension, we also bear the risk if average life expectancy rises more than expected and your payouts therefore have to last longer. 
  
You can read more about average interest rate here
  

2. What is market rate?

 
Market rate is a type of pension savings where your savings are invested in the financial markets. This offers the potential for higher returns over time, but also greater fluctuations in the value of your savings and therefore in your payouts. Market rate plans do not include any guaranteed benefits or guaranteed minimum payout. 
  
You can read more about market rate here
  

3. What is transfer allowance?

 
Transfer allowance is a bonus amount that is added on top of your savings if you transfer your savings from average interest rate to market rate.
 
The transfer allowance compensates you for giving up your guaranteed benefits and any collective reserves that may be linked to average interest rate when you transfer from average interest rate to market rate.
  

4. How is transfer allowance calculated?

 
The allowance is calculated based on the size of your savings and the current market conditions, and it may change from month to month. The allowance is calculated on the basis of rules reported to the Danish Financial Supervisory Authority and constitutes, together with your savings, the total financial value of your plan in average interest rate environment. For certain product types, no transfer allowance is granted and there may be restrictions as to when an allowance can be obtained.
  

5. Who can qualify for transfer allowance?

 
The transfer supplement is offered to customers with PFA Average Interest Rate who choose to transfer their savings to market-rate investment. To receive the supplement, the savings in PFA Average Interest Rate must meet certain criteria and you must have savings in market-rate investment that meet certain corresponding conditions.
  

6. When will PFA stop offering transfer allowance?

 
The option of transfer allowance will cease on 28 December 2026.
  

7. Can I still transfer my savings after 28 December 2026?

 
Yes. You can still transfer your savings from average interest rate to market rate – but without transfer allowance.
  

8. Will my average interest rate plan change when PFA no longer offers transfer allowance?

 
No. Your savings in average interest rate will not change if you do not transfer them to market rate.
  

9. Why is the option of transfer allowance ending?

 
We have offered transfer allowance for many years. We believe that most of the customers who might be interested in this option have already made use of it.
We are therefore closing this option so that we can use the resources where they create the most value for you and the customer community as a whole.
  

10. When will something happen to my savings?

 
Nothing will happen unless you actively ask for your savings to be transferred.
  

11. Where can I see whether I qualify for transfer allowance?

 
On My PFA, you can see your options and, if applicable, your transfer allowance. Among other things, you must have pension savings with payments in PFA Plus (market rate) in order to be able to transfer.
  

12. What are the advantages and disadvantages of transferring to market rate?

 
There are both advantages and disadvantages connected to transferring to market rate:

Advantages
• You have the potential for higher returns because your savings are invested with a higher level of risk in market rate (PFA Plus)
• You may be eligible for transfer allowance
• Fewer expenses as you only have to pay for the administration of one plan
• You get a better overview which makes it easier to adjust and change your plan
• There is greater flexibility, as you can decide how much investment risk your savings should be exposed to 

Disadvantages
• The savings will no longer be covered by the special guaranteed benefits that ensure you a minimum payout from your average interest rate plan
• You bear the investment risk in PFA Plus, where no guaranteed benefits exist
• On transfer of temporary and lifelong life pensions (annuities) to PFA Plus, you will also bear the risk of an increase in life expectancy. This means that the payouts from your life pension will change as PFA’s expectations to average life expectancy changes. Payouts from your life pension in the average interest rate environment will not decrease even if life expectancy changes. 

If you need more information or clarification, feel free to call one of our advisers at (+45) 70 12 50 00.
  

13. Can I change my mind after I have approved the transfer?

 
No, the decision is binding once you have approved the transfer.
  

14. Why can some savings in average interest rate only be transferred after 1 September?

  
Your options will depend on your plan. With some plans, you can transfer your savings now, while with some older plans this will only be possible from 1 September 2026.

To be able to transfer your savings, you must have a plan in market rate that you are making payments to. If you do not, you must first set up a market rate plan and stop the payments to average interest rate before the savings can be transferred. If you wish to do this, please contact us for advice about your options before you can proceed.
  

15. I have several savings plans in average interest rate – why can they not all be transferred to market rate?

 
Your average interest rate plan must meet certain criteria for you to be able to transfer the savings to market rate.
 
On My PFA (”Your savings”, ”Transfer to market rate”) you can see which of your plans the savings can be transferred from.
  

16. Where can I see my transfer allowance on My PFA?

 
On My PFA (”Your savings”, “Transfer to market rate”).

Here, you will be guided through the process and can read about the advantages and disadvantages of transferring to market rate. For some older plans, you can only see the transfer allowance from 1 September onwards.
  

17. Where can I seek help?

 
You can find more information and get help on english.pfa.dk/contact.