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Charge on policy transfers and surrenders

Charge on policy transfers and surrenders means that customers who decide to terminate or transfer their pension scheme (including in connection with a change of job) must pay a certain percentage of their savings. The charge on policy transfers and surrenders only applies to pension schemes established as Gennemsnitsrente pension products.

If you terminate or transfer your Gennemsnitsrente pension scheme, you have to pay a charge on policy transfers and surrenders so that the remaining customers do not have to pay your share of the bill for the loss suffered by the company on customers’ savings.

I would like to transfer my scheme to you – is that a good idea?

If your savings are covered by a charge on policy transfers and surrenders, it is best to leave them until the charge on policy transfers and surrenders is removed again. Until then, you are free to transfer your future contributions.

Your future contributions will in fact also be covered by the charge on policy transfers and surrenders. In popular terms, this means that the DKK 100 you contribute on Monday will, depending on the company, only be worth DKK 85-95 on Tuesday. The joint reserves have been lost and have to be rebuilt. The value of the your savings have been reduced to less than the value of the future payments. Your future contributions will contribute to rebuilding the joint reserves and that limits the ability to provide a high rate of interest on policyholders' savings for the coming years.

Instead, it will be an advantage to leave your current savings until the charge on policy transfers and surrenders has been removed again as you will otherwise lose 5-15 per cent of your savings here and now. We suggest that you complete all the paper work now and then we will transfer the savings as soon as the charge on policy transfers and surrenders is removed.

What if I want to increase my percentage investment in shares right now because I find that the share prices are historically low?

It is possible to pay the charge on policy transfers and surrenders to pull out of a Gennemsnitsrente pension scheme with your current company and transfer the money to a unit-linked pension product in Velliv if you believe that this is attractive seen from a long-term perspective.

I have already asked you to transfer my pension scheme from a company which has now introduced a charge on policy transfers and surrenders. What happens next?

We will send you a letter to agree on what to do. You can choose between the following options:

  • The transfer should not be made now because the scheme is covered by the charge on policy transfers and surrenders. You give Velliv permission to transfer the value of the scheme if the charge on policy transfers and surrenders is removed within 36 months.
  • The transfer should not be made because the scheme is covered by the charge on policy transfers and surrenders.
  • The transfer should be made now although the scheme is covered by the charge on policy transfers and surrenders.
  • The transfer should be made now because the scheme is not covered by the charge on policy transfers and surrenders.

When will the companies remove the charge on policy transfers and surrenders again?

The charge on policy transfers and surrenders will remain in force for as long as the market value of the assets in the interest rate group to which the scheme belongs (shares, bonds, etc.) is lower than the value of the provisions to cover the customers’ pensions. The major fluctuations seen in share and bond prices in recent years have made it difficult to assess for how long each company has to maintain the charge on policy transfers and surrenders.

If I transfer my pension scheme covered by the charge on policy transfers and surrenders, have I then lost the reduction in my savings forever or will I get it back later?

Yes, you will lose the amount which your current company charges on policy transfers and surrenders if you transfer the pension scheme. However, remember that you can leave your current savings until the charge on policy transfers and surrenders is removed again and only transfer your future contributions.

How do I know if the scheme I want to transfer to you is covered by a charge on policy transfers and surrenders?

Call the company and ask them whether your pension scheme is covered by a charge on policy transfers and surrenders.

Can I transfer my future contributions and leave my savings with my current company?

Yes, you can do that.

This means that the pension scheme with your old company will be changed to a scheme without contributions (a paid-up policy). This will typically cost you DKK 81 a month. We do not offer to pay such fee.

Can I transfer the scheme I have with you?

Yes, Velliv has not introduced a charge on policy transfers and surrenders. You are free to transfer your scheme to another company if you want. 

It is not a good idea to transfer your pension funds to a company which has introduced a charge on policy transfers and surrenders. You might not be able to get the funds back without having to pay the charge on policy transfers and surrenders. A charge on policy transfers and surrenders indicates that the company lacks bonus reserves in order to meet its obligations towards the customers. The reserves must be rebuilt before the company can offer a higher interest on policyholders' savings to the customers. Therefore, it makes good sense to leave the money with us.