Secondment often involves major changes. Many things have to be checked before you can start your life in the new country.
One of the questions is what will happen to your pension scheme which you have with Velliv through your employer. We can help you with that.
The advice is provided in cooperation between you, your employer, us and any other advisers.
If you need specific information about the conditions in the country of secondment, please contact an independent adviser in that country, Skattestyrelsen, Udbetaling Danmark, your lawyer and/or accountant.
What will happen to your pension scheme?
When you are seconded, you have two options. The choice is yours, but the change has to be made via your employer.
Your options are:
Your pension scheme remains unchanged.
-If you are seconded for a short period of time (up to 183 days), it is often a good idea that your contributions continue and that we do not change your pension scheme.
Your pension scheme is changed into a paid-up policy, and we establish a non-deductible pension scheme.
If you are seconded for a long period of time, the best solution is often that your employer stops contributions to your current pension scheme before you leave. The tax benefits will typically not be available while you are seconded.
Instead, your employer can make contributions to a non-deductible pension scheme. That is called a section 53A scheme.
If possible, you will have the same insurance cover as before. But because the contributions are not tax-deductible, the disbursements are exempted from taxation.
What do you need to consider?
While you are on secondment, things may happen that affect your pension scheme. For instance, you may move to another country, your period of secondment may change or you may get married or divorced.
It is important that you or your employer contact us and any other advisers as it may affect your pension and tax situation. This way, your pension scheme will be adjusted if you need it.
Before you return home
Already before you return home, it is important to find out what to do with your pension scheme. In most cases, your tax status will change from your first working day in Denmark. When you return home, your options depend on what you chose when you left Denmark:
- Your pension scheme was not changed
Your scheme will now continue without any changes.
- Your pension scheme was changed into a paid-up scheme and we established a non-deductible pension scheme
Now, you will have a tax-deductible pension scheme through your employer again, including the same insurance cover as you have had so far.
We recommend that you agree with your employer to surrender the pension scheme to which you made contributions while you were on secondment.
At the same time, you make additional contributions to your pension scheme, meaning that over an agreed period, you will pay an amount after tax that corresponds to the amount you have received. The agreed period can be no more than 24 months.
You have to pay a surrender fee, but you do not have to pay monthly administrative costs and be taxed as capital income on interest and return on the non-deductable pension scheme via your annual tax statement.
It is a condition for the surrender of the pension scheme that you send a copy of valid photo ID (passport or driving licence) and that you fill in and send a Know your customer form.
The reason is that Velliv is required to help prevent international crime and money laundering.
If you plan to go on secondment again, you have to consider whether you have sufficient time to contribute the surrender value before you go abroad again.
If the additional contributions to your pension scheme are more than 20 per cent of your salary, you may be subject to additional taxation if your Danish tax liability ceases within 5 years (of the increase). Therefore, it might be a good idea to check this with Skattestyrelsen before you go abroad again.
Do you have any questions?
Please do not hesitate to contact your company’s contact person at Velliv.
If you do not know who your contact person is, please ask your employer. You can also call our customer centre on +45 70 33 99 99.