Act on the Employees' Inflation Fund

Consolidation of the Act on the Employees' Inflation Fund Hereby is consolidated the Act on the Employees' Inflation Fund, cf. Consolidation Act No. 1109 of 9 October 2014 with the amendments resulting from Section 7 of Act No. 1490 of 23 December 2014, Section 3 of Act No. 1531 of 27 December 2014, Section 2 of Act No. 1569 of 15 December 2015, Section 12 of Act No. 395 of 2 May 2016, Section 12 of Act No. 1549 of 13 December 2016, Section 11 of Act No. 1547 of 19 December 2017, Section 30 of Act No. 58 of 30 January 2018, Section 16 of Act No. 706 of 8 June 2018, Section 8 of Act No. 369 of 9 April 2019, Section 10 of Act No. 552 of 7 May 2019, Section 11 of Act No. 1374 of 13 December 2019, Section 16 of Act No. 1563 of 27 December 2019, Section 8 of Act No. 641 of 19 May 2020, Section 16 of Act No. 2382 of 14 December 2021 and Section 8 of Act No. 409 of 25 April 2023.

Chapter 1 The Fund's Task

Section 1. The Employees' Inflation Fund is established with the task of administering and disbursing the funds derived from contributions to the Labour Market Supplementary Pension in accordance with Act No. 230 of 2 June 1977 on temporary contributions from the State to the Labour Market Supplementary Pension of certain inflation portions (the Inflation Contribution Act). These funds are separated from the Labour Market Supplementary Pension funds upon the entry into force of this Act.

Subsection 2. The Employees' Inflation Fund shall also operate the Employees' Fund for Outstanding Holiday Pay in accordance with the Act on the Administration and Management of Outstanding Holiday Pay.

Chapter 2 Conversion to LD Retirement Savings and Disbursement

Section 2. An employee for whom amounts have been paid in accordance with the Act on temporary contributions from the State to the Labour Market Supplementary Pension of certain inflation portions may demand payment of the amount plus what has been credited to the employee's account in accordance with Section 6 d, subsections 2-4,

1. when the employee has reached the age of 60,
2. upon award of early retirement pension under the Social Pension Act,
3. upon transition to receiving current own pension according to rules for civil servants in the State, the public school system, and the Church of Denmark, and for municipal civil servants, as well as according to rules for employees in positions linked to a pension scheme that essentially provides rights similar to those under the Civil Servant Pension Act,
4. upon transition to receiving old-age pension or award of invalidity pension, invalidity lump sum, or other benefit based on a permanent loss of earning capacity of 50 percent or more from an approved pension scheme established by agreement between an employee and their employer or based on a collective agreement, regulation, etc.,
5. upon award of compensation for loss of earning capacity of 50 percent or more in accordance with the Act on Work Injury Insurance, the Liability Act, or other corresponding laws, or
6. upon award of foreign pensions or compensation for loss of earning capacity of 50 percent or more, corresponding to those mentioned in nos. 2-5,
7. when a life-threatening illness has occurred in accordance with the rules established pursuant to Section 25, subsection 2, of the Taxation of Pensions Act, which shall apply mutatis mutandis,
8. upon relocation abroad to take up permanent residence and after having resided abroad for 6 months,
9. upon relocation to Greenland or the Faroe Islands to take up permanent residence there and after having resided there for 5 years.

Subsection 2. Upon the employee's death, the amount plus additions shall be paid to the estate.

Subsection 3. Amounts that could not be paid upon the employee's death, cf. subsection 2, shall accrue to the Fund 5 years after the employee's death.

Section 2 a. An employee who meets the requirements for payment, cf. Section 2, subsection 1, nos. 1-9, may, upon payment of tax according to Section 14 A, subsection 2 or 3, of the Taxation of Pensions Act, choose instead of payment to keep the account active upon payment of the aforementioned tax.

Subsection 2. An balance in the Employees' Inflation Fund on which tax has not been paid is named LD Savings, while a balance in the Employees' Inflation Fund on which tax has been paid, cf. subsection 1, is named LD Retirement Savings.

Subsection 3. When the tax has been paid, cf. subsection 1, the remaining amount may be paid out according to Section 2 or handled in accordance with Section 3.

Subsection 4. Keeping the account active after subsection 1 upon payment of tax according to Section 14 A, subsection 2 or 3, of the Taxation of Pensions Act, may be done by measures of the Employees' Inflation Fund for employees who have not received the balance paid out. The Employees' Inflation Fund shall notify the employee that the account is kept active after subsection 1, unless the employee opts out of this.

Section 3. By the time the employee reaches the age of 70 at the latest, the amount plus additions shall be paid out by the Fund's measures. Amounts that could not be paid out before the employee reaches the age of 75 shall accrue to the Fund, cf. however subsection 2.

Subsection 2. The employee may choose to postpone the payment after subsection 1 for periods of 5 years at a time. The Fund will seek to have the amount paid out at the end of the 5-year period, unless the employee chooses beforehand to postpone the payment again. Amounts that could not be paid out shall accrue to the Fund 10 years after the employee last chose to postpone the payment.

Chapter 3 Administration

Section 4. The Employees' Inflation Fund is managed by a board of directors and an executive board. The board of directors is appointed by the Minister for Employment and consists of 7 members. Of the 7 members, 4 are appointed as follows:

1. 2 members upon nomination by the Danish Confederation of Trade Unions (Landsorganisationen i Danmark).
2. 1 member upon nomination by the Danish Confederation of Professional Associations (FTF).
3. 1 member upon nomination by the Danish Confederation of Professional Associations (Academicians' Central Organisation).

Subsection 2. The board of directors should, as far as possible, have a balanced composition of men and women. When members are to be nominated after subsection 1, each organization must nominate both a man and a woman. The organizations indicate in their nominations whom they prefer, and the Minister for Employment must follow this nomination, unless the board thereby would receive a gender-skewed composition. In that case, the Minister for Employment is entitled to appoint others among the nominated candidates, so that the board as far as possible receives a balanced composition of men and women. The Minister for Employment decides which of the nominated candidates shall be appointed as a member of the board of directors.

Subsection 3. If there are special reasons, an organization may deviate from the provision in subsection 2, second sentence. The organization must in that case indicate the reason for this.

Subsection 4. The board of directors is appointed for 3 years at a time, and reappointment may take place.

Subsection 5. The board of directors elects 1 chairman among the board members who are appointed by the Minister for Employment upon nomination by the organizations, cf. subsection 1, nos. 1-3.

Subsection 6. The board of directors elects 1 deputy chairman among the 3 board members who are appointed directly by the Minister for Employment.

Subsection 7. The Minister for Employment establishes statutes for the Fund, including detailed rules on the payment of amounts under the Act and on information to employees regarding amounts, interest, costs, tax, etc.

Section 4 a. A member of the board of directors or the executive board in the Employees' Inflation Fund must have sufficient experience to perform their duties or occupy their position in the Fund.

Subsection 2. A member of the board of directors or the executive board must fulfill the following:

1. Must not have been or be subject to criminal liability for violation of this Act, the Penal Code, financial legislation, or other relevant legislation, if the violation entails a risk that the person cannot perform their duties or position in a satisfactory manner.
2. Must not have filed a petition for restructuring proceedings, bankruptcy, or debt adjustment, or be under restructuring proceedings, bankruptcy proceedings, or debt adjustment.
3. Must not, due to their financial situation or through a company which they own, participate in the operation of, or have significant influence on, have caused or cause the Employees' Inflation Fund loss or risk of loss.
4. Must not have exhibited or exhibit behavior where there is reason to assume that the person will not perform the duties or position in a defensible manner. In assessing whether a member of the board of directors or executive board exhibits or has exhibited unacceptable behavior, consideration must be given to the interest in maintaining confidence in the financial sector.

Subsection 3. When a person assumes a position as a board member or a position as a member of the executive board in the Employees' Inflation Fund, the Danish Financial Supervisory Authority ensures that the person fulfills the suitability and integrity requirements in subsections 1 and 2. The Danish Financial Supervisory Authority makes the decision on whether the person can hold the position or office in the Employees' Inflation Fund.

Subsection 4. If the Danish Financial Supervisory Authority assesses that the person does not fulfill the requirements in subsection 2, the duration of the decision must appear in the decision.

Subsection 5. The Danish Financial Supervisory Authority may in special cases, where the Danish Financial Supervisory Authority assesses that a person does not have sufficient professional prerequisites or experience relative to the position as a member of the executive board, as assessed by the person, make a decision that the person can hold the position under more precisely defined conditions.

Subsection 6. Members of the board of directors or executive board notify the Danish Financial Supervisory Authority of information regarding matters mentioned in subsection 2 in connection with their assumption of office, and if the circumstances subsequently change.

Subsection 7. The board of directors in the Employees' Inflation Fund must, as part of the company's corporate governance, cf. Section 4 c, subsection 1, identify the company's key persons and notify the Danish Financial Supervisory Authority thereof.

Subsection 8. Subsections 1-6 apply mutatis mutandis to employees who are identified as key persons after subsection 4.

Section 4 b. The board of directors for the Employees' Inflation Fund must

1. identify and quantify the Fund's significant risks and establish the Fund's risk profile, including setting which and how large risks the Fund may take on, and
2. establish policies for how the Employees' Inflation Fund shall manage each of the Fund's significant activities and the risks associated therewith, taking into account the interaction between these.

Subsection 2. Based on the established risk profile and established policies, the board of directors must give the executive board written guidelines, which must at minimum contain

1. controllable frameworks for which and how large risks the executive board may impose on the Fund,
2. the principles for calculating the individual risk types,
3. rules on which dispositions require the board's approval and which dispositions the executive board may make, and
4. rules on how and to what extent the executive board must report to the board of directors regarding the Fund's risks, including the utilization of the frameworks in the guidelines for the executive board and compliance with the limits set in legislation regarding the risks that the Employees' Inflation Fund may take on.

Subsection 3. The board of directors must continuously take a position on whether the Fund's risk profile and policies as well as the guidelines for the executive board are defensible relative to the Fund's activities, organization, and resources, including capital and liquidity, as well as the market conditions under which the Fund's activities are conducted.

Subsection 4. The board of directors must continuously assess whether the executive board performs its tasks in accordance with the established risk profile, the established policies, and the guidelines for the executive board. The board of directors must take appropriate measures if this is not the case.

Subsection 5. The Danish Financial Supervisory Authority establishes detailed rules after consultation with the Minister for Employment regarding the obligations that lie upon the board of directors in the Employees' Inflation Fund in accordance with subsections 1-4.

Section 4 c. The Employees' Inflation Fund must have effective forms of corporate governance, including

1. a clear organizational structure with a well-defined, transparent, and consistent division of responsibilities,
2. good administrative and accounting practices,
3. written business procedures for all significant activity areas,
4. effective procedures to identify, manage, monitor, and report on the risks that the Fund is or may be exposed to,
5. the resources necessary for the proper implementation of the Fund's activities and a reasonable use of these,
6. procedures aimed at separation of functions in connection with handling and prevention of conflicts of interest,
7. sufficient internal control procedures,
8. secure control and security measures in the IT area, and
9. a written salary policy that is in accordance with and promotes sound and effective risk management.

Subsection 2. The Danish Financial Supervisory Authority establishes detailed rules after consultation with the Minister for Employment regarding the measures the Employees' Inflation Fund must take to have effective forms of corporate governance, cf. subsection 1.

Section 4 d. The Employees' Inflation Fund may outsource a process, a service, or an activity that is subject to the supervision of the Danish Financial Supervisory Authority and which the Employees' Inflation Fund would otherwise perform itself, to a supplier.

Subsection 2. The Employees' Inflation Fund must ensure that outsourcing of critical or important operational functions or activities does not take place in a manner that can

1. cause a significant deterioration of the quality of the management system in the Employees' Inflation Fund,
2. cause an unnecessary increase in operational risk,
3. deteriorate the supervisory authorities' opportunity to control that the Employees' Inflation Fund complies with its obligations, or
4. hinder the Employees' Inflation Fund from at any time offering entitled employees satisfactory service.

Subsection 3. The Employees' Inflation Fund must notify the Danish Financial Supervisory Authority in connection with entering into an agreement on outsourcing of critical or important operational functions or activities. The Employees' Inflation Fund must furthermore notify the Danish Financial Supervisory Authority of significant changes in the functions or activities mentioned in the first sentence.

Subsection 4. The Employees' Inflation Fund is responsible for all outsourced functions or activities.

Subsection 5. The Danish Financial Supervisory Authority may make a decision that the Employees' Inflation Fund's outsourcing shall be terminated within a deadline set by the Danish Financial Supervisory Authority, if the outsourcing contract or its parties do not fulfill the rules in this provision or rules established pursuant to subsection 6.

Subsection 6. The Minister for Business Affairs establishes detailed rules regarding outsourcing concerning

1. the Employees' Inflation Fund's responsibility and control with a supplier, including the supplier's further outsourcing,
2. the Employees' Inflation Fund's internal guidelines for outsourcing, and
3. requirements that the Employees' Inflation Fund must at minimum ensure that suppliers at any time fulfill, and which must be agreed upon in the outsourcing contract.

Section 5. The Employees' Inflation Fund may enter into agreements on administration, IT deliveries, and asset management tasks with external suppliers according to rules issued pursuant to Section 4 d.

Section 5 a. Persons who are employed by the board of directors in the Employees' Inflation Fund according to law or statute provisions, and employees for whom there is a significant risk of conflicts between their own interests and the Employees' Inflation Fund's interests, may not for their own account or through companies they control

1. take out loans or draw on already approved credits for the purchase of securities, when the purchased securities are pledged as security for the loan or credit,
2. acquire, issue, or trade with derivative financial instruments, unless the purpose is risk hedging,
3. acquire capital shares, apart from shares in Danish UCITS, investment funds, and foreign investment institutions covered by Section 143, subsection 1, nos. 2 and 3, of the Act on Investment Funds etc., with the aim of selling these earlier than 6 months after acquisition, or
4. acquire positions in foreign currency apart from the euro, when the position taking is done with the aim of anything other than payment for the purchase of securities, goods, services, purchase or operation of real estate, or for use during travel.

Subsection 2. The person group mentioned in subsection 1 may not acquire capital shares in companies that conduct business as mentioned in subsection 1, nos. 1-4. This does not apply, however, to the purchase of shares in credit institutions, insurance companies, mortgage credit institutions, fund brokerage companies, as well as shares in Danish UCITS, investment funds, and foreign investment institutions covered by Section 143, subsection 1, nos. 2 and 3, of the Act on Investment Funds etc.

Subsection 3. The board of directors must take a position on which employees there is a significant risk of conflicts between their own interests and the Employees' Inflation Fund's interests, and who therefore must be covered by the prohibition. The board of directors must ensure that the relevant persons are aware of this. The criminal provision in Section 14 a applies from the time when the person has received information about this.

Subsection 4. The board of directors must for persons covered by subsection 1 prepare guidelines for control with compliance of the prohibition in subsection 1 and subsection 2, first sentence, including reporting of asset dispositions.

Subsection 5. The external audit must once a year review the Employees' Inflation Fund's guidelines after subsection 4 and in the audit protocol regarding the annual report state whether the guidelines are assessed to be secure and have functioned reasonably, and whether the Employees' Inflation Fund's control procedures have given rise to remarks.

Subsection 6. A custodian institute has, upon request from the board of directors in the Employees' Inflation Fund, the obligation to give the Employees' Inflation Fund's external audit access to information about accounts and deposits and to issue prints therefrom for persons covered by subsection 1.

Subsection 7. The prohibition in subsection 1, no. 2, does not cover financial instruments that are derived from shares in a company that is group-related with the Employees' Inflation Fund, and which the person receives as part of their remuneration.

Subsection 8. The prohibition in subsection 1, no. 1, does not cover loans for the purchase of employee shares as well as the instruments mentioned in subsection 7.

Subsection 9. The prohibition in subsection 1, no. 3, does not cover shares that are acquired by utilizing the instruments mentioned in subsection 7.

Subsection 10. Internal audit and deputy internal audit chiefs may regardless of subsections 1-9 not have economic interests in companies that are group-related with the Employees' Inflation Fund.

Section 5 b. The Employees' Inflation Fund may not enter into engagements with members of the board of directors or executive board, employees in the Fund, the Fund's external auditors, or the internal audit and deputy internal audit chiefs.

Subsection 2. Without the board's approval, which must be entered into the board's meeting protocol, the Employees' Inflation Fund may not grant engagements to or receive security from companies in which board members or persons who are employed by the board of directors in the Employees' Inflation Fund according to law or statute provisions are directors or board members.

Subsection 3. The engagements mentioned in subsection 2 must be granted according to the Employees' Inflation Fund's usual business terms and on market-based terms. The Fund's elected auditor must in the audit protocol regarding the annual report give a declaration on whether the requirements in the first sentence are fulfilled.

Subsection 4. The executive board and the board of directors must in a special degree monitor the defensibility and progress of the engagements mentioned in subsection 2.

Subsection 5. The rules in subsection 2, subsection 3, first sentence, and subsection 4 also apply to engagements with companies in which persons who are connected to members of the executive board by marriage, cohabitation for at least 2 years, kinship or affinity in direct ascending or descending line, or as siblings, are directors.

Section 5 c. Persons who are employed by the board of directors in the Employees' Inflation Fund according to law or statute provisions may not without the board's permission own or operate independent business activity or as a board member, employee, or in another way participate in the management or operation of other business activity than the Employees' Inflation Fund, cf. however Section 9, subsections 8 and 9.

Subsection 2. Other employees in the Employees' Inflation Fund, for whom there is a significant risk of conflicts between their own interests and the Employees' Inflation Fund's interests, may not without the executive board's permission own or operate independent business activity or as a board member, employee, or in another way participate in the management or operation of other business activity than the Employees' Inflation Fund. The board of directors must be informed about permissions given by the executive board.

Subsection 3. The board of directors must take a position on which employees there is a significant risk of conflicts between their own interests and the Employees' Inflation Fund's interests, and who therefore must have the executive board's permission, cf. subsection 2. The board of directors must ensure that the relevant persons are aware of this. The criminal provision in Section 14 a applies from the time when the person has received information about this.

Subsection 4. The business mentioned in subsections 1 and 2 may only be conducted, provided that the Employees' Inflation Fund or companies that are part of a group with the Employees' Inflation Fund do not have or enter into engagements with the business activities mentioned in subsections 1 and 2 or companies that are part of a group with these companies. Excluded from this are engagements in the form of capital shares, engagements with the companies mentioned in subsections 5 and 6, as well as engagements with business activities that are part of a group with the Employees' Inflation Fund, or business activities where the Employees' Inflation Fund, the Labour Market Supplementary Pension, the Labour Market Occupational Insurance, or financial companies jointly or together with funds and associations established pursuant to Sections 207 and 214 and Section 215, subsection 1, of the Act on Financial Business own more than 4/5 of the capital shares.

Subsection 5. The engagement prohibition mentioned in subsection 4 does not apply in connection with participation in the boards of directors for Danmarks Skibskredit A/S, Dansk Udviklingsfinansiering A/S, BSU-fonden, LR Realkredit A/S, Bornholms Erhvervsfond, Grønlandsbanken A/S, Kongeriget Danmarks Fiskeribank, stock exchanges, authorized marketplaces, clearing centers, securities central depositories, OMX AB, OMX Exchanges Oy, the Industrialisation Fund for Developing Countries (IFU), and the Industrialisation Fund for Eastern Countries (IFØ).

Subsection 6. The engagement prohibition mentioned in subsection 4 does not apply in connection with participation in the board of directors for a company that is temporarily operated by the Employees' Inflation Fund pursuant to Section 6 c, subsection 4, to secure or liquidate previously entered engagements.

Subsection 7. All permissions given by the board of directors pursuant to subsection 1 must appear in the board's meeting protocol.

Subsection 8. The Employees' Inflation Fund must at least once a year publish information about the positions that the board has approved in accordance with subsection 1. Furthermore, the external auditor must in the audit protocol regarding the annual report give a declaration on whether the Employees' Inflation Fund has engagements with business activities covered by subsections 1 and 2.

Subsection 9. The Danish Financial Supervisory Authority may in special cases dispense from subsection 4.

Section 5 d. The rules on group representation in the Act on Limited Liability Companies do not apply to employees in companies through which the Employees' Inflation Fund temporarily operates other business according to this Act.

Section 5 e. (Repealed)

Section 5 f. The Employees' Inflation Fund must have an arrangement where the Fund's employees via a special, independent, and autonomous channel can report on...