Matter wiki

Matter wiki

Understand company pension

What is a company pension?

A company pension is a pension scheme set up by employers, to which both the employer and employee typically contribute every month. A pension scheme is often a part of a company’s wage and pension policy.

The size of the payments to an employees’ pension can vary from company to company. Typically, a share is paid by the employer, while the rest is paid by the employee and most often deducted from the salary before tax.

A company pension provides security for both employer and employee
Should an employee fall ill or be involved in an accident, everyone would benefit from a company pension scheme. The company will have the salary of the absent employee covered, and the employee will have better chances of returning quicker and stronger to their daily routines.

Further benefits associated:

  • The company ensures higher employee loyalty
  • The risk of losing good employees decreases
  • The company looks more attractive to new applicants

What about the employee?
With a company pension scheme you give your employees financial assurance with savings and insurance:

  • With pension
  • In case of lost employability due to illness or an accident
  • In case of critical illness
  • In case of hospital treatment
  • In case of bereavement

Company pension also means insurance
A company pension scheme most often include both savings and insurances. With good insurances your company takes responsibility for their employees. You ensure an economic safety net to catch them and their loved ones in case of illness, accidents or bereavement.

As the employer it is important to research prices and coverage and whether the insurances are flexible. For instance, if your employees can choose higher coverage if they have children to provide for. Or, if employees with former medical history also has sufficient coverage.

AP Pension recommends that all employees by default are covered in case of lost employability, critical illness and bereavement.

Ensure flexible risk profiles
Returns on investments are important for most Danes when asked about their pension. And it’s therefore a good idea for employers to research potential pension providers’ historical returns. Tomorrow is promised to no one, but history can maybe give you a clue about their future performance.

Furthermore, your employees can benefit from choosing their own investment profile. Through Matter and AP Pension, your employees can for instance choose between investing the whole, a share or nothing at all of their savings in the sustainable portfolio.

What costs should you be concerned about?
Costs can also have an impact on the size of your retirement savings. Key indicators to look for are annual costs in monetary terms DKK (ÅOK) and annual costs in percent (ÅOP). This way, you will get an overview of the costs of administering and investing your pensions.

Lastly, the ownership structure of the pension company can also make a difference for your savings. AP Pension is for instance owned by the customers which means that all profits are shared between them.

Your employees have different counselling demands
Some people just need basic counselling, while others have a more complex private economy and need help to build in their new pension scheme. A pension scheme is dynamic and should be accustomed throughout someones’ work life. Some people for instance want to have extra insurance coverage at times where the family is very dependent on the employee’s income.

AP Pension recommends that all employees go through their pension and insurance scheme at least every fifth year, and even more often with big changes in their private lives. The advisory service can be a physical meeting or online, and through AP Pension every employee will automatically be offered sufficient counselling.

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