Working life

You get a raise or a bonus

A raise or a bonus is a nice boost to your budget and often goes hand in hand with increased spending. However, if you want your financial expectations for your life as a pensioner to follow suit, then you must increase your payments to your pension savings as your salary increases.

Important matters when you get a raise or a bonus

✔ Pension payments

✔ Insurance cover

✔ Designation of beneficiaries
  

 


How do raises and bonuses impact pensions?

Most people are surprised that salary increases during their career also have a great impact on their future pension income once the pension payments also increase. However, this is not enough, because when you increase your standard of living and your expectations rise to meet the new higher salary, you also have to contribute more to your pension savings to make up for the period with a lower salary.

 


What does a raise or a bonus mean for your pension?

If, for example, you have a regular pension plan where your contributions are 15 per cent throughout your working life from age 30 to 68, then with a salary of DKK 400,000 per year and without any salary increases during your career, you can look forward to quite a good pension payout during your retirement, amounting to around 80 per cent. However, if your real wage has increased by, for example, 1 per cent per year during your working life, then the projected payout you will receive as a pensioner will decrease to around 60 per cent of your former salary.


What do you need to pay the most attention to when saving up?

It is easy to increase your spending - for example, you might want to have some work done on the house, get a bigger car or take an extra holiday. On the other hand, it is hard to lower your spending. Therefore, the trick is to avoid increasing your spending levels by too much and instead use some of the increase in salary on consumption and some of it on savings. We recommend that you start saving up early in life - that will help to make it a good habit. We also recommend increasing your savings as you get older and when your salary increases or expenses decrease.

 

Make your changes via My PFA

At My PFA, you can access and change your plan so that it is appropriate for your situation.

If you have any questions, please call PFA’s Advisory Services Centre at (+45) 70 12 50 00.

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