Contributory pension accounts are individual savings plans the sole purpose of which is old age provision.

Contributory pension accounts entitled to tax deductions could be taken out until 2 June 1998. For these contributory pension accounts, the contributions made during the year of taxation can be deducted. During the maturity period, interest and dividend etc. credited to the account are not liable to income taxation, but are liable to PAL taxation.

Contributory pension accounts taken out after 2 June 1998 are regarded as normal bank accounts with no deduction for contributions, and where the yields must be included in the income statement. These plans will not be described in more detail as they are not covered by PAL.

A deductible contributory pension account could be taken out by anyone between the ages of 18 and 50 years. The account had to be set up in the account holder's own name, and the start date for disbursement was 15 years after the setting-up of the account at the earliest and not until the account holder had reached the age of 60. On setting up the account, the account holder had to sign a declaration stating that he had not set up a similar account elsewhere.

Each year, the account holder can make a contribution to the account of his own choice, however the minimum limit being DKK 3,000 and the total maximum limit being DKK 40,000. The amount stated does not include interest as it is regarded as contributions.

The account holder may place the balance in the account

• in a deposit account either in cash or in pool schemes, or
• in a separate custody account.

Withdrawal from the account

The account holder can withdraw his deposit in a contributory pension account

• in case of permanently reduced functional capacity before the expiry of the maturity period or
• in case of a life-threatening illness as mentioned in Danish Order no. 1031 of 24 October 2005 on disbursement of capital pension etc. in case of life-threatening illness, cf. Section 1(2) of the Order.

In the event of the account holder's death

If the account holder dies before the expiry of the maturity period, the contributory pension account is terminated as of the date of death, and the deposit is released to the person who, according to the document from probate court, is entitled to the deposit.

The rules for contributory pension accounts are set out in Section 51 of PBL and in Danish Order no. 302 of 2 May 2000 on contributory pension accounts set up before 2 June 1998.

Contributory pension accounts set up before the 1987 year of taxation with a balance of less than DKK 500 can be withdrawn even though the general conditions have not been met. See the Assessment General part, Section A.C.3.2.1.