Act on Company Pension Funds

Act on Company Pension Funds 1)

Hereby is promulgated Act No. 355 of 2 April 2020 on company pension funds with the amendments that follow from Section 7 in Act No. 1940 of 15 December 2020, Section 10 in Act No. 2382 of 14 December 2021, Section 12 in Act No. 2601 of 28 December 2021, Section 4 in Act No. 409 of 25 April 2023 and Section 337 in Act No. 718 of 13 June 2023.

Chapter 1 Scope of Application of the Act

Section 1. Any promise of pension (pension commitment) in connection with an employment relationship must be covered either by an insurance company or a pension fund that, in accordance with the Act on Insurance Business, is permitted to conduct insurance business, or by a company pension fund that has permission in accordance with this Act.

Subsection 2. Subsection 1 does not, however, apply to promises of pension

1. made by the State, a municipality or a municipal association,
2. made to directors or their survivors,
3. regulated in accordance with special legislation, or
4. made by municipal associations for whose liabilities the municipalities are fully liable.

Section 2. This Act applies to any association (pension fund) that has as its objective, on the basis of a promise of pension, to secure pensions for employees in connection with employment in a company offering a pension scheme or in companies offering pension schemes within the same group.

Subsection 2. Insurance companies and pension funds that are subject to supervision under the Act on Insurance Business, and promises of pension that are covered by Section 1, Subsection 2, are not covered by this Act.

Subsection 3. A company pension fund that provides civil servant-like pensions, and for which the State or a municipality is fully liable or guarantees, is not covered by this Act.

Subsection 4. For branches in this country of foreign company pension funds that have been granted permission to conduct pension fund business in a country within the European Union or a country with which the Union has concluded an agreement in the financial sector, Section 8, Subsections 1 and 2, and Sections 89 and 90 shall apply.

Subsection 5. The provisions of the Companies Act on branches of foreign limited liability companies shall apply to branches in this country of foreign pension funds that have been granted permission to conduct pension fund business in a country within the European Union or a country with which the Union has concluded an agreement in the financial sector.

Subsection 6. For services provided in this country by foreign pension funds that have been granted permission in another country within the European Union or a country with which the Union has concluded an agreement in the financial sector, Section 8, Subsections 1 and 2, and Sections 89 and 90 shall apply.

Subsection 7. The Danish Financial Supervisory Authority may set more lenient requirements for compliance with the provisions of this Act for company pension funds with fewer than 100 members.

Subsection 8. The Danish Financial Supervisory Authority may, after consultation with the relevant minister or municipality, determine that a company pension fund, for whose liabilities the State or municipality is fully liable or guarantees, is wholly or partially exempt from Section 8, Subsection 2, and Sections 12, 15, 16, 21-34, 40, 47, 48, 57, 58 and 75-88.

Chapter 2 Definitions

Section 3. In this Act, the following terms are understood as:

1. Pension scheme: An agreement, contract, articles of association or statutes etc. regarding which pension benefits are paid and on what terms.

2. Company offering a pension scheme: Any business or other body acting as an employer or self-employed person or any combination thereof, which offers a pension scheme or pays pension contributions to a company pension fund.

3. Pension benefits: Benefits paid upon reaching or expected reaching of retirement age or, when dealing with complementary supplements to such benefits, upon death, disability or termination of employment or in the form of support in case of illness, social hardship or death. To facilitate the recipient's economic security in old age, these benefits may consist of lifetime payments, terminating payments, a lump sum or any combination thereof.

4. Member: A person who is not a pension recipient or a potential member, and whose previous or current employment entitles or will entitle the person to receive pension benefits in accordance with the provisions of a pension scheme.

5. Pension recipient: A person who receives pension benefits from a company pension fund.

6. Membership: All members and pension recipients in a company pension fund.

7. Potential member: A person who is entitled to join a pension scheme.

8. Biometric risks: Risks of death, disability and longevity.

9. Defined contribution pension scheme: A pension scheme where pension contributions are set in advance, and where pension benefits are then calculated based on these contributions.

10. Defined benefit pension scheme: A pension scheme where pension benefits are set in advance, and where pension contributions are then calculated based on these benefits.

11. Outsourcing: A company pension fund's allocation of an area of activity subject to the supervision of the Danish Financial Supervisory Authority to a supplier.

12. Outsourcing company: A company pension fund that outsources an activity to a supplier.

13. Supplier: A company that performs tasks for a company pension fund.

14. Re-outsourcing: A supplier's outsourcing of tasks, which it performs in accordance with an agreement with a company pension fund, to a sub-supplier and the sub-supplier's possible further outsourcing of the tasks to the next link in the chain of sub-suppliers and their possible further outsourcing to other links in the chain of sub-suppliers.

15. Ultimate beneficial owner: A natural person who ultimately directly or indirectly owns or controls a sufficient part of the ownership shares or voting rights, or who exercises control by other means.

16. Home Member State: The Member State where the company pension fund is registered or has obtained permission, and where it has its head office.

17. Host Member State: The Member State whose social and labour law regarding occupational pension schemes applies to the relationship between the company offering a pension scheme and the members or pension recipients.

18. Transferor company pension fund: A company pension fund that wholly or partially transfers a pension scheme's liabilities, pension provisions and other liabilities and rights and corresponding assets or cash equivalent thereto to another company pension fund.

19. Transferee company pension fund: A company pension fund that wholly or partially receives a pension scheme's liabilities, pension provisions and other liabilities and rights and corresponding assets or cash equivalent thereto from another company pension fund.

20. Regulated market: A multilateral system operated in accordance with the rules in Chapters 12-14, 22 and 23 of the Capital Markets Act.

21. Multilateral Trading Facility (MTF): A multilateral system operated in accordance with the rules in Chapters 17, 18, 20, 22 and 23 of the Capital Markets Act.

22. Organised Trading Facility (OTF): A multilateral system that is not a regulated market or a multilateral trading facility.

23. Permanent Medium: An arrangement that enables a member or a pension recipient to store information sent to that member or that pension recipient personally, so that it is available for future use for a period of time appropriate to the purpose of the information, and which allows for the unchanged reproduction of the stored information.

24. Key Function: A capacity that performs special management tasks, including the risk management function, the internal audit function and the actuarial function.

25. Cross-border business: Administration of a pension scheme where the relationship between the company offering a pension scheme and the affected members and pension recipients is subject to the social and labour law relevant to the area of occupational pension schemes in a Member State other than the home Member State of the company pension fund.

26. Competent Authorities: The national authorities empowered by law or other regulations to exercise supervision over business types covered by this Act.

27. Severance Pay: Any form of payment that the recipient becomes entitled to in connection with their departure, and which does not a) constitute salary or value of employee benefits during the notice period, b) constitute reasonable compensation for assuming non-compete clauses or customer clauses, or c) follow from mandatory legislation.

Chapter 3 Company Pension Fund Business

Section 4. Associations covered by Section 2, Subsection 1, shall use the word "company pension fund" in connection with their name, cf. however Section 121, Subsection 2.

Section 5. A company pension fund may not conduct other business than the pension fund business specified in the permission, cf. Annex 1, unless otherwise follows from Subsection 3 or Section 6.

Subsection 2. A company pension fund conducts other business when the company pension fund alone or together with a company offering a pension scheme exercises decisive influence over a commercial business.

Subsection 3. A company pension fund may jointly with other companies conduct other business if

1. the company pension fund does not directly or indirectly have decisive influence on the business,
2. the company pension fund does not conduct the business together with a company offering a pension scheme or with other pension funds or insurance companies that are part of an administrative association with the company pension fund, and
3. the business is conducted in a company other than the company pension fund.

Subsection 4. If a company pension fund, through merger, entry into or change of an administrative association or change in the share owned by a company offering a pension scheme etc., comes to conduct other business in violation of Subsection 1 or 3, the company pension fund must divest this other business. The Danish Financial Supervisory Authority may set a deadline for the divestment of the other business if immediate divestment would be associated with an economic loss.

Section 6. A company pension fund may construct, own and operate real estate and infrastructure comprising technical installations, transport installations and building installations.

Subsection 2. A company pension fund may offer digital solutions and services if they are a natural extension of the permitted business.

Section 7. A company pension fund may not take out loans or act as guarantor for third parties.

Subsection 2. The Danish Financial Supervisory Authority may permit a company pension fund to take out loans on a temporary basis if it is for liquidity purposes.

Chapter 4 Good Conduct and Contractual Relations

Section 8. A company pension fund shall conduct business in accordance with honest business practices and good practice for the business area.

Subsection 2. The Minister for Business Affairs shall set detailed rules on honest business practices and good practice and on the disclosure obligations of company pension funds towards potential members, members and pension recipients.

Subsection 3. The Danish Financial Supervisory Authority may, after consultation with representatives of consumers and the relevant financial industry organizations, draw up and publish guidelines on honest business practices and good practice in specified areas that can be considered significant, particularly from the perspective of consumers.

Section 9. If a company pension fund that has permission to conduct pension fund business, on its own initiative, offers all or a group of its membership to change their pension agreement to include a product with lower or no guarantees, a member or a pension recipient who accepts such an offer must have the economic value of their current product transferred to the new product.

Subsection 2. The Danish Financial Supervisory Authority shall set detailed rules for the calculation of the economic value of the member's or pension recipient's product.

Section 10. Members, pension recipients and persons entitled to pension may not transfer rights, which they have claims to in a company pension fund, to ownership or pledge or otherwise dispose of them. Such rights may not be subject to legal enforcement.

Section 11. A company pension fund may not, in connection with or after admission of members, request, obtain or receive and use information that can shed light on a person's genetic predisposition and risk of developing or contracting diseases, including requiring examinations necessary to provide such information. This does not, however, apply to information about the person's current or previous health condition.

Chapter 5 Establishment and Permission

Section 12. A company pension fund may not commence its business before the Danish Financial Supervisory Authority has granted permission for this.

Subsection 2. The Danish Financial Supervisory Authority grants a company pension fund permission upon application when

1. registration has taken place with the Danish Business Authority,
2. the business has its home in Denmark,
3. the business's management and key persons meet the conditions in Section 42 and
4. the business's organizational and administrative conditions are sound.

Subsection 3. The application for permission must contain the information necessary for the Danish Financial Supervisory Authority to assess whether the conditions in Subsection 2 are met, including information about the technical basis and the business's organization.

Subsection 4. The Danish Financial Supervisory Authority makes a decision on permission no later than 6 months after the Danish Financial Supervisory Authority has received all information necessary to process the application. A decision must in any case be made no later than 12 months after receipt of the application. The Danish Financial Supervisory Authority immediately notifies the applicant of the decision.

Subsection 5. If the Danish Financial Supervisory Authority has not made a decision no later than 6 months after receipt of a complete application, the applicant may bring the matter before the courts.

Section 13. A company pension fund must have statutes. The company pension fund's statutes must contain provisions on:

1. The name of the company pension fund.
2. The objective of the company pension fund.
3. The members and pension recipients of the company pension fund.
4. The number of board members and any alternate board members as well as the term of office of board members.
5. Any limitations on the signing authority of board members and the executive management in accordance with Section 38.
6. Convocation of general meetings.
7. Which matters shall be processed at the ordinary general meeting.
8. Amendment of statutes and pension regulations.
9. Accounting and processing of the annual report.
10. Placement of the company pension fund's funds.
11. Use of surplus and coverage of deficit.
12. What shall happen to the company pension fund if the company offering a pension scheme is wholly or partially dissolved or transferred or if the company offering a pension scheme for other reasons wishes to terminate the pension scheme.
13. The dissolution of the company pension fund and use of the company pension fund's funds.
14. Procedures for resolution of disputes between a member or a pension recipient and the company pension fund.

Subsection 2. The statutes must contain information about the name of the company offering a pension scheme and about the obligations that the company offering a pension scheme has undertaken towards the company pension fund.

Section 14. A company pension fund with defined benefit pension schemes may make a decision to pay funds to the company offering a pension scheme. The payment presupposes that

1. the general meeting with the approval of at least two-thirds of the votes cast makes a decision to pay funds to the company offering a pension scheme, or that the company pension fund's statutes contain a provision that the board can make a decision to pay funds to the company offering a pension scheme,
2. the decision is made in connection with the submission of the annual report and
3. the company pension fund, after payment, has a basic capital that meets the requirements in Chapter 9.

Subsection 2. If the company pension fund's statutes can only be amended with approval from another authority, a decision at the general meeting according to Subsection 1, no. 1, requires the same approval as a statute amendment.

Subsection 3. A company pension fund with defined benefit pension schemes may make a decision to temporarily suspend the company offering a pension scheme's contribution payments if

1. the company pension fund's pension regulations or statutes contain a provision that the company pension fund can make a decision that the company offering a pension scheme's contributions can be reduced for a period in relation to the set contribution (suspension), and
2. the company pension fund, after suspension, has a basic capital that meets the requirements in Chapter 9.

Section 15. A company pension fund must have pension regulations. The pension regulations must contain:

1. The statute provisions adopted in accordance with Section 13, Subsection 1, no. 1-3.
2. Rules for the size and adjustment of pension commitments as well as their calculation and payment.
3. Rules for members' rights upon leaving the company pension fund, including the size of or rules for calculating the exit allowance and deferred pension.
4. Rules for pension contributions.
5. Rules for members' and pension recipients' rights and duties otherwise.

Section 16. The Companies Act Sections 24-27 apply correspondingly to company pension funds with the necessary adaptations. If a constituting general meeting is held, the eligible voters are summoned according to the draft statutes.

Subsection 2. If a constituting general meeting is held, this makes a decision with a simple majority among the present eligible voters on approval of statutes and pension regulations and on whether the company pension fund shall be established. A decision to amend the draft statutes and pension regulations can be made with a simple majority regardless of the draft's provisions on majority for amendments after establishment. A decision to amend, which is not indicated in the summons, requires, however, consent from all eligible voters. The general meeting's decision on establishment must not be made before the general meeting has approved statutes and pension regulations.

Subsection 3. When the company pension fund is established, the board and auditors are elected according to the statutes' provisions on this.

Section 17. The company pension fund must be reported for registration with the Danish Business Authority no later than 2 weeks from the signing of the establishment document, alternatively from the holding of the constituting general meeting. The application must be received by the Authority within the deadline.

Subsection 2. The report must contain information about name, function and residence for the company pension fund's board members and any alternates for these and for directors and auditors as well as about the company pension fund's address. The persons who have the right to sign for the company pension fund must indicate in their own handwriting how they will sign.

Subsection 3. Documentation must accompany the report showing that the company pension fund's board members and auditors meet the conditions mentioned in Sections 32, 73 and 74.

Section 18. No later than simultaneously with the report for registration with the Danish Business Authority, the company pension fund must submit an application for permission to the Danish Financial Supervisory Authority.

Subsection 2. A certified extract of the general meeting minutes signed by all board members must accompany the application for permission.

Section 19. A company pension fund may not be registered with the Danish Business Authority before the Danish Financial Supervisory Authority has given permission.

Subsection 2. Information about the matters mentioned in Section 13, Subsection 1, no. 1, 2, 5, 6 and 9, and Section 17, Subsection 2, is entered in the register.

Subsection 3. Upon granting permission or changes in a permission, the Danish Financial Supervisory Authority simultaneously sends a copy thereof to the Danish Business Authority. The Danish Business Authority registers the date of permission.

Section 20. A company pension fund that is not registered cannot acquire rights or enter into obligations.

Subsection 2. If pension commitments are made despite the provision in Section 12, Subsection 1, before registration has taken place, those who have made the commitment on behalf of the company pension fund or have joint responsibility for this are jointly and severally liable for the fulfillment of the agreement. If the company pension fund acknowledges the obligations no later than 4 weeks after registration, the aforementioned liabilities cease, provided that the member's security is not thereby significantly deteriorated. Agreements of the aforementioned type are not binding for the member before the company pension fund's acknowledgment of the obligations.

Subsection 3. For other obligations entered into on behalf of the company pension fund before registration, those who entered into the obligation or have joint responsibility for this are jointly and severally liable. Upon registration, the company pension fund assumes the obligations, provided that the counterparty's security is not thereby significantly deteriorated.

Section 21. For reporting and registration, the Companies Act Chapter 2 applies.

Subsection 2. If there is a change in matters reported to the Danish Business Authority, a new report must be made, which must be accompanied by documentation for the lawful adoption of the change. Section 19, Subsection 1, applies correspondingly.

Subsection 3. Report to the Danish Business Authority about changes in the company pension fund's statutes must be received no later than 2 weeks after the change is adopted. The report must contain a dated copy of the statutes with the complete new wording to the Danish Business Authority, which forwards a copy to the Danish Financial Supervisory Authority.

Section 22. The Danish Financial Supervisory Authority may set detailed rules on

1. the content of company pension funds' statutes and pension regulations and
2. the demarcation between company pension fund business and other insurance business.

Chapter 6 General Meeting in Company Pension Funds

Section 23. Members' and pension recipients' right to make decisions in the company pension fund is exercised at the general meeting. However, it can be determined in the statutes that the election of the board or amendment of statutes or pension regulations is carried out by the company pension fund's members and pension recipients by ballot.

Subsection 2. Every member and every pension recipient who, in accordance with the company pension fund's statutes, has access to participate in the general meeting, has the right to speak there. In voting, every member and every pension recipient has one vote.