Get inspired by the Danes and ‘hygge’ your pension
Elle Tucker | February 5, 2019
Time to read: 5 minutes
Most of us have probably heard of ‘hygge’ by now (pronounced hoo-guh), the Danish concept that focuses on living life in a ‘cosier’ way: think reading a book by a roaring fire, candles or sharing a hearty meal with friends.
But it’s not just about getting comfortable and savouring the moment, much as that’s appealing. It’s all about wellbeing throughout your life – not just in the winter months.
So there’s another good reason we can look to the Danes: their ‘hygge’ attitude of nurture and valuing experiences influences how they save for, and live, life after work.
That’s not all, folks
Many Danes are able to enjoy a ‘cosy’ retirement due in part at least to their public ‘folkepension’ that ensures that those in retirement get a good basic retirement income. It’s their version of the State Pension.
On top of that, they have long-established company pensions which the Danish government is keen to keep improving. As a recent World Finance article* explained: “Danish companies and institutions have taken a unique level of social responsibility in supporting their employees through pensions savings and insurance services.”
So much so, that only the Netherlands and Denmark are ranked as having first-class retirement systems in Mercer’s 2018 global retirement report (2). Giving them plenty of opportunity for hygge.
Nadia Koch: “We enjoy a more ‘hygge’ life”
London-based Danish photographer and lifestyle blogger Nadia Koch, Scandi Mummy, points out that an important factor in the retirement debate is the way Danish people look after each other as a society from a young age.
“Right from birth, women and now many men, have well-paid and long leave when their children are born, allowing them to connect and care for their newborn and themselves.
“Despite the high taxes in Denmark,” Nadia continues, “most people can afford to set money aside as salaries are high, too. Some choose to downsize later in their life as children will have left the family home, and this also frees up money that allows them to enjoy a more ‘hygge’ life.
“This often includes a lot of travelling, sports activities like golf, tennis and many enjoy social activities like bridge, not to mention dining out and hosting friends and family.”
Taking inspiration from those Great Danes…
That’s good news for Denmark. But what about here in the UK?
Actually we have quite a lot in common. More of us are living longer and that’s changing how we need to save for what could be a long retirement.
With that in mind, the UK Government is doing what it can to boost the opportunity to save for retirement through auto-enrolment, where employers automatically enrol their eligible workers into a pension scheme, which they also contribute to.
It means saving more for life after work is increasingly the norm, with almost 10 million people auto-enrolled since it began just over six years ago.
More of us are living longer
The UK State Pension age is increasing in line with longevity. In November 2018, it became the same for men and women for the first time at age 65 – and it’s rising again in 2020 to age 66. You can find out more about the UK State Pension and when you might get it in our article The State Pension – what do I need to know?
Similarly, the Danish government is due to increase retirement age from 2025 and encourage more and better private pension saving so that people rely less on their state ‘folkepension’.
For everyone, this means there’s even more reason to save into a pension – whether that’s a workplace or personal one – and take control of saving for the future.
Taking control increases your chances of being able to choose when you stop working. And thanks to UK pension freedoms, introduced in 2015, we can all have more of a say in when and how we stop work – or work less.
Looking to the future
Find out how your retirement savings are shaping up using our simple pension calculator, read our guide to investment, or find out more from the Money Advice Service, which has great information on starting out and saving throughout your working life.
Talk it through with your adviser if you have one.
And, if you don’t, you can find one on unbiased.co.uk or you could contact 1825, Standard Life Aberdeen Group’s financial planning business (bear in mind an adviser will charge for advice). After all, there is a lot to look forward to.
Elle Tucker is a freelance journalist writing on behalf of Standard Life
Tax and legislation may change and the information here is based on our understanding in January 2019 and shouldn’t be regarded as financial advice. Your own circumstances will have an impact on your tax treatment.
Personal and workplace pensions are an investment, the value can go down as well as up and you could get back less than you paid in.
*Danish Government raises retirement age as benefits system continues to prosper, World Finance article, August 2017