About MP Pension

The pension fund for Danish M.A’s, M.Sc.’s and Ph.D’s who are employed in the public sector at universities and upper secondary schools.

3. marts 2016

The pension scheme

 

This section, which provides a summary of the general coverage in your pension scheme (flexible scheme), also presents an overview of the many options available in our flexible scheme that allow you to adapt your coverage to suit your needs and those of your family. Here is a summary of how you are covered with regards to your pension scheme, considering that you have not opted for an alternative form of benefits. There is also the possibilty of adapting your cover so it matches the needs of your family.

The rules can vary depending on your terms of employment, just as a transitional scheme might apply depending on when you were admitted to the pension fund. The exact details are listed in Rules & Paragraphs.

The described pension, relates to the scheme created within your union agreement (compulsory membership) regardless of your admission date, whether it is after 1 January 2008 or if you have opted for the flexible pension scheme with effect from 1 January 2009. The rules might vary, if you have changed from the old to the flexible pension scheme. See the transitions here.

Read more about your coverage here

Beneficiaries

 

It is possible to insert a beneficiary (one or more) on your capital pension and/or expiring annuity pension, along with your group life insurance.

Unless you have agreed otherwise with us, your next-of-kin will receive the money from your schemes or group life insurance. 

You have tax deduction for your pension contributions. As a result of this the Danish Pension Taxation Law restricts who you can insert as beneficiaries on your pension scheme. According to the law, you can insert the following people as beneficiaries; next-of-kin, spouse/registered partner (also divorced spouses), a named cohabitant and/or children (also stepchildren, cohabitants children and the heirs of these), as you don't have tax deduction for your group life insurance, the restrictions don't apply for the group life insurance.

Estate tax
According to the Estate tax law, an Estate tax will be levied on the possessions left by the deceased, in this scenario a capital pension and/or expiring annuity pension, will be seen as a possession. The pension fund withholds the Estate tax before disbursement. The size of the Estate tax depends on who the recipient is, and varies from 0%, 15% and 36,25%. Spouses are exempt from the Estate tax.

Complaints

 

Because many disagreements can be solved through dialogue, which is often the best solution for all parties involved, we would like to ask you to please contact the department in charge of handling your case prior to contacting the complaints manager if you disagree with the outcome of your case.

Complaint resolution procedures
If after having contacted the relevant department, you still disagree with the outcome of your case, you are welcome to write to the pension funds complaints officer Anne Rubin
, and she will assess your case. Serving as a liaison between the administration and the member registering a complaint, Anne Rubin is responsible for correctly handling complaints about the administration's decisions.

If you would like to register a complaint, please contact our complaints officer Anne Rubin: klage@mppension.dk

The Insurance Complaints Board
If the disagreement remains after the complaint officer and possibly the Board has considered the case, you can bring your case to The Insurance Complaints Board:

Ankenævnet for Forsikring (The Insurance Complaints Board)
Anker Heegaards Gade 2, 1.
1572 København V
Tlf. 33 15 89 00 (kl. 10-13)

You can send a complaint to The Insurance Complaints Board by completing a complaint form, which you can download at www.ankeforsikring.dk

When you complain, you must pay a fee of DKK 200 to The Insurance Complaints Board. The fee will be paid back to you if The Insurance Complaints Board decides fully or partly in your favour. As a rule we follow The Insurance Complaints Boards decision.  We may, however, within 30 days announce that we will not follow the decision. Until now we have always followed the decisions of The Insurance Complaints Board.

The courts or arbitration
Instead of bringing a case to The Insurance Complaints Board you can:

  • Bring your case to the courts or
  • Require settlement through arbitration

You can also bring your case to the courts if The Insurance Complaints Board has not decided in your favour, or we have announced that we will not follow the decision from The Insurance Complaints Board.

European Commission's online complaint portal
European Commission's online complaint portal can also be used when you want to complain. It is relevant if you reside in another EU country.
Go to the European Commission´s complaint portal.
When you complain you have to enter our mail address: klage@mppension.dk

Average Rate Scheme or Market Rate Scheme?

 

Now Members of MP Pension can elect to swap from Average Rate Scheme to Market Rate Scheme.

Average Rate Scheme is a sound product, giving members that which they most request, namely, a high return and stable payment. It is, however, also a product that is not necessarily easy to understand. In response to this, MP Pension has developed an alternative product with the same possibility of high return and stable pensions while at the same time being more transparent.

Greater transparency
The Average Rate Scheme places part of the total return in the collective equity while the remainder is put into your custody account. If you choose to switch to a Market Rate Scheme, your share of the collective equity will be added to your custody account.

With our new Market Rate Scheme product, the actually achieved return will be added to your custody account one-to-one. If the return goes up by 5%, so does your custody account. If the return drops, however, so will your custody account. This makes it easier for you to get an overview of your pension savings.

Flexibility and security
With a Market Rate Scheme, you have the exact same insurance cover in case of illness, disability and death as you already have with your Average Rate Scheme. You will also enjoy the flexibility in terms of adjusting your insurance products to suit your circumstances.

If you switch to the Market Rate Scheme, you will still be receiving stable payments when you retire. The payments are calculated as an average of the return for the past 10 years. This minimises the effect of any economic up- and downturns and gives you financial security.

Average Rate Scheme

With the Average Rate Scheme, your pension earns interest at a rate determined by the Board. You do not need to worry about market fluctuations or investment selection. Until 31 December 2016, all MP Pension members were placed on Average Rate Scheme.

Average Rate Scheme savings
For your Average Rate Scheme, your custody account receives monthly interest payments, known as the rate of interest. The rate of interest is determined once annually by the Board and is not the same as the actual return. The difference – positive as well as negative – between the actual return and the determined rate of interest is applied to the equity and will be paid out as supplementary pension. 

For the Average Rate Scheme, your custody account receives an interest rate after deduction of return tax (currently 15.3%) and investment costs. The rate of interest provides an averaged return.

During periods with higher returns than the rate of interest, the surplus is collected in the collective buffers. The collective buffers consist of the equity and the special bonus allocations.

Average Rate Scheme custody account
The custody account for the Average Rate Scheme consists of your savings and the addition of our rate of interest.

The custody account does not contain special bonus allocations or pension return tax (PAL).

Cover

  • Life-long pension, paid out from the time of retirement until death.
  • Disability pension, paid on loss of earning capacity of not less than 2/3 until the age of retirement. In case of a loss of earning capacity of between half and 2/3, half cover is payable. When receiving disability pension, there is a right to contribution exemption, ensuring continued saving for the age-related retirement pension, and unchanged death cover.
  • Spouse and cohabitant’s pension, to be paid out upon the death of the member and 10 years hence. The cover can be changed to life-long cover or de-selected prior to your 60th birthday.
  • Children’s pension, payable to the member’s children upon the death or disablement of the member until the child turns 21.
  • Optional death benefit in the event of death prior to your 67th birthday.
  • Group insurance, including payment in case of death, disablement, and certain critical illnesses.

Average Rate Scheme payment
The pension is paid out as basic pension and supplementary pension. Basic pension is conditionally guaranteed, while supplementary pension is not guaranteed.

The basic pension is based on a precondition of an Average Rate Scheme, currently 0%. The difference between the rate of interest and the conditional interest rate is called interest bonus. Your part of the equity and special bonus allocations is paid out as a supplementary pension together with the payment of the basic pension.

An interest element of 3.75%, called the calculation rate, has already been included in the pensions. It is therefore the difference between the return and the 3.75% that is being adjusted.

Administration cost price
The price is determined annually by the Board of Directors and is estimated at cost. Current costs are DKK 20 per month, 0.7% of deposits, and 0.00% of the custody account.


Insurance cover price
The price is determined annually by the Board of Directors and is estimated at cost. The price depends on the insurance cover you have selected.

Special bonus allocations
For Average Rate Scheme pensions, a sum equivalent to 5% of the payments to basic capital is allocated in the form of special bonus allocations. These funds are not part of the custody account, but are included in the collective capital. The collective capital of the pension fund covers all losses. The special bonus allocations are paid to the member upon retirement or surrender. Your share of the special bonus allocations can be seen in the custody account statement.

 

Market Rate Scheme

With the Market Rate Scheme, your custody account reflects the return at a one-to-one ratio. When you log in to mppension.dk, you can see the current return and keep up-to-date with your custody account on a monthly basis.

As of 1 January 2017, new MP Pension members shall be entered under the Market Rate Scheme. Members who currently have a Average Rate Scheme can elect to switch to a Market Rate Scheme as of 1 July 2017.

A risk profile to maximise the pension
Our Market Rate Scheme features a solidarity-based risk profile determined by the Board of Directors and is shared by all members. It is not possible to choose individual risk profiles since the purpose of the Market Rate Scheme product is to generate the highest possible return for you over the entire period.

Our Market Rate Scheme product is not scaled down in terms of risk, but will develop with the same risk profile throughout your life. In this way, you can reap the benefit of high risk assets when your custody account is at its highest level. This differs from a traditional Market Rate Scheme product which features low risk when the custody account is at its highest level.

Market Rate Scheme savings
Market Rate Scheme makes it easy for you keep up with your pension savings. With Market Rate Scheme, you get the exact same interest as we get from our investments.

The return is credited to your custody account at a one-to-one ratio. If the market goes up by 5%, your savings will go up at the same rate, just as your savings will drop if the market declines.

The actual return after investment costs – positive as well as negative – is applied on a monthly basis. You can see the current return by logging in to mppension.dk

Market Rate Scheme custody account
With the Market Rate Scheme, your custody account consists of your own savings, the addition of our return, and any due pension return taxes (PAL), which is settled with the Danish tax authority, SKAT, but earns interest in your custody account.

The custody account does not contain any special bonus allocations.

Cover

  • Life-long pension, paid out from the time of retirement until death.
  • Disability pension, paid on loss of earning capacity of not less than 2/3 until the age of retirement. In case of a loss of earning capacity of between half and 2/3, half cover is payable. When receiving disability pension, there is a right to contribution exemption, ensuring continued saving for the age-related retirement pension, and unchanged death cover.
  • Spouse and cohabitant’s pension, to be paid out upon the death of the member and 10 years hence. The cover can be changed to life-long cover or de-selected prior to your 60th birthday.
  • Children’s pension, payable to the member’s children upon the death or disablement of the member until the child turns 21.
  • Optional death benefit in the event of death prior to your 67th birthday.
  • Group insurance, including payment in case of death, disablement, and certain critical illnesses.

Market Rate Scheme payment
The MP Pension Market Rate Scheme product includes an adjustment mechanism to ensure that the actual investment return is spread out over a 10-year period. When you leave the job-market, therefore, you are secure against large payment fluctuations. You will only experience limited fluctuations, giving your financial security, irrespective of market developments.

The 10-year adjustment mechanism is very robust to market fluctuations: Seen over a very long period of history, 1927-2013, there have been 3-4 market events where the 10-year adjustment has resulted in a minor reduction in pension payments for a short period of time.

The 10-year period has been chosen as it results in significantly smaller fluctuations than, say, a 5-year period would do. The 10-year period may, however, be changed in the future, if the need for this should arise.

The Market Rate Scheme is not guaranteed.

An interest element of 3.75%, called the calculation rate, has already been included in the pension. It is therefore the difference between the return and the 3.75% that is being adjusted.

Administration cost price
The price is determined annually by the Board of Directors and is estimated at cost. Current costs are DKK 20 per month, 0.7% of deposits, and 0.00% of the custody account.

Insurance cover price
The price is determined annually by the Board of Directors and is estimated at cost. The price depends on the insurance cover you have selected.

Special bonus allocations
For Market Rate Scheme, a sum equivalent to 2% of the payments to basic capital is allocated in the form of special bonus allocations. These funds are not part of the custody account, but are included in the collective capital. The collective capital of the pension fund covers all losses. The special bonus allocations are paid to the member upon retirement or surrender. Your share of the special bonus allocations can be seen in the custody account statement. 

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