PFA Plus Free

PFA Plus Free: New option for those who are covered by a collective agreement with new flexible savings options
You can now make savings in a new way if you have freedom to choose between pension payments and salary as part of your collective agreement. As something new, you can make an agreement with your employer about what should happen to the part of your pension payment that exceeds 15 per cent. 

Watch the video with Camilla Schjølin Poulsen

When you are deciding what to do with the part of your pension payment that exceeds the 15 per cent, you now have the option of making payments into the new savings solution at PFA — PFA Plus Free.

Payments are not tax deductible, but you can get the money paid out tax-free — even before you reach retirement age. This can be a great advantage if you want to take a leave of absence, study or at some point in your life need savings to pay for major expenses.

You can read more on this page — and learn about the new options in the video with PFA’s private economist, Camilla Schjølin Poulsen.

Give yourself more options with PFA Plus Free

Save up with the option to withdraw money before retirement

When you make payments into PFA Plus Free, you are not entitled to a tax deduction right away, but you can get the money paid out tax-free — even before you reach retirement age. For example, this can be an advantage if you want to take a leave of absence or study. It costs DKK 350 to withdraw money from your PFA Plus Free savings.

Read moreView lessYour savings with PFA Plus Free are invested
In PFA Plus Free, your money will be invested in 50/50 ratio of listed global shares and bonds. It means that you have a balanced risk. As is always the case with investments, however, there is no guarantee and the return may become negative. The return in PFA Plus Free is taxable as capital income and will be taxed via your annual statement — it is not possible to pay tax out of your savings.
 
Stay tuned to My PFA
You can see the balance of your PFA Plus Free savings at My PFA at any time. As we do not know whether you spend the money before you retire, we do not include the value in your Pension Estimate, which will therefore decrease if you opt for PFA Plus Free. In short, the Pension Estimate is a figure that shows what percentage of your current income you can expect to live on when you retire.
 
Read more and see your Pension Estimate at My PFA (mitpfa.dk)

Pay as much as possible into your regular pension savings

You can choose that most of your payments should go to your pension savings. Then you will enjoy the benefits that you have through your regular pension savings — that is, for example, low tax payments on your pension yield, deductions on your payments and opportunity to decide how to your savings should be invested. 

Read moreView lessOn the other hand, pension savings can only be paid out when you reach your earliest possible retirement age.
 

Get your remaining payments paid out as salary

You can also choose that the part of your pension payments that exceeds 15 per cent should be paid out as salary instead.

This will give you a greater financial headroom here and now, but less money to spend when you retire. You can calculate how much less you will get by using our ‘Increase your savings calculator’ at pfa.dk — remember to put a minus sign in front of the result.

Try our ‘Increase your savings calculator’ here (in Danish only)
 


What you should do if you want to use the new options or change previous choices

If you would like to make payments into PFA Plus Free, get more out as a salary or change a previous choice, you have to reach out to your employer. You should know that your employer may decide that your choice of PFA Plus Free should apply for, for example, 12 months. 

Do you want to know more about PFA Plus Free?

You can find answers to the most frequently asked questions below and dive deeper into the topic.
 

1. Why has my employer given me the option of PFA Plus Free?

It is because of the latest collective agreement that considered a request for more freedom and more attractive options for the employees.
 
Among other things, PFA Plus Free allows you:
• to define the use of your own savings to pay for breaks, changes in working life, etc.
• to break with the classic career path where you start by being a full-time student, then a full-time employee and finally a full-time retiree.
• to take time off/leave of absence, reduce your working hours or upgrade your skills.
• to try your hand at being self-employed/freelancing for a period of time or make other career changes in your working life.          

2. How do I get the PFA Plus Free savings plan?

You contact your employer and then decide what should happen to the part of your pension payment that exceeds 15 per cent.

You have the following option:
• Continue to pay the amount into your pension plan
• Add any amounts exceeding the mandatory 15 per cent to PFA Plus Free
• Take out amounts exceeding the mandatory 15 per cent as salary

If you do not make any changes, you will continue to make the full pension payments to your pension plan.
  
If you have had a similar product with another pension provider, you can transfer those funds to PFA Plus Free at PFA.

3. If I get a negative return on my PFA Plus Free plan, can I use it to offset positive returns on other plans?

No, you can only offset and carry forward negative returns on your PFA Plus Free plan. However, any losses can be carried forward to coming years with positive returns.

4. Can I get advice on whether I should make payments to PFA Plus Free?

We can help you with advise on whether your pension plan matches your needs and whether there is room for PFA Plus Free. We recommend that you start by checking your Pension Estimate at My PFA to get an indication of whether your pension plan is robust enough.

We cannot offer specific advice on PFA Plus Free. PFA can, as always, advise you on your ordinary pension plan.
If you have any questions, please call PFA.

5. Where can I keep track of the balance of my new savings plan?

You can see the balance of your Plus Free savings at My PFA at any time. Oplysningerne vil være tilgængelige senest én måned efter, at PFA modtager indbetalingen fra din arbejdsgiver.

6. Why does my Pension Estimate decrease if I add the savings plan?

The Pension Estimate is an indicator of how much money you will have at your disposal at any time compared to your current salary (in %) when you retire. Since we do not know if you will be using the money in your PFA Plus Free savings plan before you retire, we do not include the value in your Pension Estimate, and therefore you will see that your Pension Estimate decreases if you choose Plus Free instead of pension payments, as your pension payments will decrease.

7. What is the difference between PFA Plus Free and an investment account with a bank?

In many ways, PFA Plus Free works like regular savings in an investment account with a bank where your money is invested automatically. In Plus Free, your savings will be invested in PFA Indeks 50, which invests in 50 % shares and 50 % bonds. PFA Plus Free is a so-called insurance-based investment product. The return on your PFA Plus Free will follow the performance of the underlying investments. 

PFA Indeks 50 is a balanced fund that invests 50 % in Aktier and 50 % in Globale Obligationer. PFA Indeks 50 is a non-complex product. PFA Indeks 50 is an index-tracking fund with low investment expenses. Read more here. 

PFA has chosen to invest the PFA Plus Free funds in PFA Indeks 50 because it has a simple structure and a balanced risk-return potential with low costs. In the long term, it is likely that the investment offer will be expanded.

8. What expenses do I have with PFA Plus Free?

The payment expenses are the same as for your regular pension plan. You can see your expenses at My PFA under Your insurance and then go to Prices and costs. If no payment is made into the account, you will pay paid-up policy expenses. Savings in PFA Plus Free also include investment expenses (see below).

It currently costs DKK 350 to withdraw money from PFA Plus Free. Therefore, it will typically only be expedient to withdraw large amounts.

9. For how long does PFA recommend that I invest through PFA Plus Free?

PFA recommends a minimum investment period of 5 years, men gerne længere.

10. Do I have any insurance cover on my PFA Plus Free? 

Yes, you have insurance cover in the event of death of DKK 10,000 on PFA Plus Free. You cannot opt out of, increase or decrease this cover.

The cover currently costs DKK 18.36 per year or DKK 1.53 per month. The insurance cover is a legal requirement to be able to offer the product. Payment protection cover is not possible for payments to PFA Plus Free.

In the event of death, PFA Plus Free will be paid out to your beneficiaries. You can have different beneficiaries on your pension plan and PFA Plus Free. PFA Plus Free is set up with ‘next of kin’ and you must subsequently change it at My PFA if you want to change the designation of beneficiaries.

11. What happens to my PFA Plus Free savings if I stop making payments?

If you stop making payments to PFA Plus Free, your savings will be converted to a savings plan without payments. The administration fee will be deducted from your savings. 
 
If you do not wish to keep your PFA Plus Free as a payment-free plan, you have various options:
• If your employment remains unchanged, you can arrange with your employer to resume payments at a later date.
• If you have a new employer who has PFA as their pension provider, you can resume payments to the plan if PFA Plus Free is part of the agreement between your new employer and PFA.
• If you have a new employer with a different pension provider than PFA, you can have your savings transferred out of PFA if the company offers a similar product.
• You can have your savings in PFA Plus Free transferred to your savings plan in PFA Plus and receive a tax deduction for the savings.
• You can have your savings paid out for a fee.
  
If your savings in PFA Plus Free are very small and you do not plan to make further payments, you should consider having your savings transferred to your savings plan in PFA Plus or having them paid out.

12. Are there special rules if I live in Greenland?

We do not recommend PFA Plus Free to customers who are liable to pay tax in Greenland as the Greenlandic tax rules impose a tax rate of 10 per cent.

13. Key information about PFA Plus Free

Read Key information about PFA Plus Free here
Read the Fact Sheet about PFA Plus Free here
Read more about sustainability related information here