The Pension Estimate - are your savings sufficient?

PFA accepts no liability for errors and omissions in the Pension Estimate. Therefore, you cannot make a claim for compensation against PFA for losses you incur as a result of decisions made based on your use of the Pension Estimator.
 
The Pension Estimate is a single figure which gives you an indication of your expected overall financial situation in retirement based on general, simplified assumptions, which you can read here. The Pension Estimator offers you guiding calculations and recommendations, which are not to be regarded as binding promises or quotations. If you want to see a forecast of your expected payouts on retirement, you can find one in the payout plan at My PFA (mitpfa.dk).

The Pension Estimator provides a simplified standard solution which, as mentioned, is based on the information we have registered or you have entered yourself. We include some of the information from your pension plan in a simple way, and that the Pension Estimator therefore is not able to allow for all conditions. For instance, we presume that your savings are invested in a standard market rate investment profile. This is why the Pension Estimate should only be used as a tool for obtaining a general view of the finances. At any time, PFA reserves the right to change the content of its recommendations.

The Pension Estimate is based on the current conditions, including legislation, societal conditions, principles of calculation, figures and rates. PFA will make an effort to update the calculations on a regular basis in connection with any changes in the stated conditions, but makes reservations for delayed and/or insufficient updates.

How we calculate your Pension Estimate

Pension Estimate = (calculated pension per month after tax / calculated salary per month after tax) x 100

Basic information for calculation of the Pension Estimate
Our calculation of the Pension Estimate is based on the following basic information:

Your age
The salary you have entered
Expected retirement age
Your total payments/own payments to your pension plan with PFA/other companies
Your total present pension savings in PFA/other companies
Any bank savings/securities on expected retirement age
Any sales value of residential property on expected retirement age

Assumptions of projection of your savings and salary for the Pension Estimate
We project your pension savings based on the societal conditions prevailing in the industry, which have been prepared by the Danish Insurance Association (DIA) in cooperation with the Danish Bankers Association. The projection is not binding, as the assumptions may change. Therefore, it is important not to mistake it for an actual forecast.

In addition, we apply the following assumptions:

The savings are invested in a standard market rate investment profile.
The return after inflation is to 2.5 % annually (cf. DIA’s pension meter).
The tax on returns amounts to 15.3 % annually (pension yield tax).
Payments to PFA CustomerCapital amount to 5.0 % of the pension payments.
The return on PFA CustomerCapital before tax and inflation is 9.0 % per year.
Deduction of labour market contribution amounts to 8.0 % of the payments.
The annual inflation rate is 2.0 %.
The basic amount of the public old-age pension amounts to 74,844 kr. per year, and the Danish Labour Market Supplementary Pension (ATP) amounts to 16,000 kr. per year if you have chosen to include this in the calculation.
Payments of insurance cover and administrative expenses will amount to 25.0 % of the future payments. For each payment exceeding 10.0 percentage points of the salary, the deduction will be reduced to 15.0 %.
The payments are adjusted regularly to match the expected development in the rate of inflation.
The payouts are adjusted regularly to largely match the rate of inflation.
No development or increases in real wages in addition to the inflation are taken into account.
The pension savings are converted into monthly payouts over 20 years
The share of your bank savings/securities and home equity on retirement, which you want to include in the calculation, is distributed on monthly payouts for 20 years. Read more in the section “Projection of savings and residential property etc.”
All payouts are stated in present value.

Read more in the section “Assumptions applying to the calculation of taxes”.

Assumptions applying to the calculation of taxes
We calculate taxes based on the present rules, and rates are based on the following assumptions (2016):

The average tax rate for a Danish local authority including church tax, bottom-bracket tax and health contribution tax (37.69 %) is applied.
We allow for top-bracket tax on personal income exceeding 467,300 kr. (15 %)
The ordinary personal income tax allowance (44,000 kr.) and employment allowance (8.3 % of 28,000 kr.) are included. Other personal allowances are excluded.
We have not allowed for the receipt of any "green cheque” or "equalisation tax" on pensions exceeding DKK 379,000.
As a standard, a flat-rate tax amounting to 40 % is charged on endowment pension (applicable to the payout plan only)
If you are married, we have not taken your spouse’s tax situation into account.
Property tax, property value tax, etc. are not included in the calculation.