Obligatory Pensions

As a resident of Greenland, you are obligated to save for your own pension.

The purpose of mandatory pension savings is to ensure that everyone in Greenland saves for their retirement, thereby securing a better financial situation during old age.

This system applies to everyone, whether you are an employee (with one or more employers) or self-employed.

The Tax Agency sends you an annual pension statement at the end of August each year:

• If you receive notice that you have not fulfilled your pension savings obligation, you must either provide documentation of the payment to the Tax Agency or make additional contributions to an approved pension scheme.
• If the annual pension statement does not instruct you to save more, it means that you have already made the necessary pension contributions for the year, and no further action is required.

The amount you need to save for your pension depends on your income, known as your Pension savings basis.

• If your savings basis is over DKK 125,000, you are required to contribute to your pension.
• If your savings basis is under DKK 125,000, you do not need to save for that year.
• If your savings basis is between DKK 125,000 and DKK 175,000, the savings rate increases linearly from 0% to the applicable rate.

For Employees:

• The pension savings basis for employees is the total of A-income and B-income.
• 2021: Save 6% of your savings basis.
• 2022: Save 6% of your savings basis.
• 2023: Save 7% of your savings basis.
• 2024: Save 8% of your savings basis.
• 2025: Save 9% of your savings basis.
• 2026: Save 10% of your savings basis.

For Self-Employed Individuals:

• The pension savings basis for self-employed individuals is the taxable profit.
• 2021: Save 4% of your savings basis.
• 2022: Save 4% of your savings basis.
• 2023: Save 5% of your savings basis.
• 2024: Save 6% of your savings basis.
• 2025: Save 6% of your savings basis.
• 2026: Save 6% of your savings basis.

If You Are Both Employed and Self-Employed:

You calculate separate pension savings bases for each. This means calculating one savings basis for your wage income as an employee and another for your profit from self-employment.

The Following are Included in the Savings Basis:

• A-income and B-income, such as:
  • Salary
  • Fringe benefits (e.g., free car, free housing, free phone, etc.)
  • Maternity benefits
  • Apprenticeship salary
  • Business profit

The Following are not included in the pension savings basis:

• Certain social benefits and subsidies (e.g., early retirement pension, housing benefits, child support, education support, old-age pension, other pension payments, alimony, public assistance).
• Certain civil servant incomes (e.g., Home Rule and municipal civil servants in Greenland, civil servants employed by the Parliament’s institutions, and State civil servants in Greenland).

For civil servant incomes, the benefits used to calculate the person's civil servant pension are not included.

If you have received an annual pension overview stating that you must contribute to your pension, you need to provide documentation of the payment to the Tax Agency.

You must submit and document the following:

1. Proof that the payment to a pension scheme is made by you or on your behalf, e.g., by your employer.
2. The payment must be made to a pension scheme covered by the law:
   • In Greenland: SISA, Grønlandsbanken, and Bank Nordik Nuuk.
   • In Denmark: Pension companies and pension funds (but not bank savings schemes), CS-Pensionsfond, or HKKF funds.
3. The payment date to the pension scheme.
4. The year you are saving for and the exact amount contributed to your pension.

If you do not meet all 4 documentation requirements, the contribution will count as a payment for the current year and not for previous savings years.

If you contribute to a §53A scheme (a Danish scheme without tax deduction), the contribution will be converted to a gross amount before tax.

Submitting Documentation:

You can submit documentation in paper form to the Tax Agency's offices or send it by post. You can also send the documentation by email.

The Tax Agency accepts bank account statements (e.g., from Netbank) or pension payment records as documentation if they include the following information:

• Payment
• Amount
• Sender
• Recipient
• Date

Please use the words "obligatory pension" in the subject line when sending the documentation.

Why should I have a pension savings?

The obligatory pension scheme was introduced to ensure a better standard of living for Greenland’s citizens when they retire. It aims to balance an individual’s consumption possibilities over their lifetime, improving future pensioners' living standards while also supporting a sustainable public economy in the long term.

Do I have to keep paying into a pension scheme?

Yes, you are required to contribute until you reach pension age (as of October 2017, it is 66 years). However, there is no requirement to continue paying into a pension scheme created by the Tax Agency. You are free to establish your own pension scheme with another provider, as long as the scheme and the company comply with legal requirements.

You can choose where to make your contributions, but your pension scheme must be placed in a pension fund, insurance company, or life or pension insurance company authorized by the Danish Financial Supervisory Authority (Finanstilsynet) to operate. This can be outside Greenland. Alternatively, the pension scheme can be placed in a financial institution with a permanent establishment in Greenland.

Are civil servant pensions (Tjenstemandspension) included in the obligatory pension scheme?

As a civil servant, you are covered by the Obligatory Pension Scheme Act, but not all parts of your income are included when the Tax Agency calculates your savings basis for the obligatory pension scheme.

A civil servant's salary often consists of several components, such as base salary and various allowances. Some of these components are considered when calculating your civil servant pension, while others are not.

The salary components used for calculating your civil servant pension are excluded from the Tax Agency’s calculation of your savings basis for the obligatory pension scheme.

Do I need to set up a new pension scheme if I already contribute to one?

The law does not require you to create a new pension scheme with a specific provider. You can continue contributing to your current pension scheme as long as your contributions meet the obligatory rates set by the law.

Can I fulfill the obligatory pension requirement with contributions to a pension scheme outside Greenland?

Yes, if your pension scheme is placed in a pension fund or a life or pension insurance company authorized by the Danish Financial Supervisory Authority, your contributions will fulfill the obligatory pension requirement. You cannot contribute to a pension scheme outside Greenland if it is placed in a bank.

Some providers with Financial Supervisory Authority approval include:

• Qimatut / SISA
• PFA / AP
• Akademiker Pension
• Lærerens Pension
• Danica Pension
• Lægernes Pension
• Sampension Livsforsikring A/S
• Topdanmark
• Industriens Pension

What is a deduction, and can I get one?

If you contribute to a pension scheme located in Greenland, you typically have the right to a tax deduction.

For pension schemes you have set up privately, the tax relief comes in the form of a deduction for your contributions. This means you can subtract the contributions from your taxable income. Note that this deduction is part of your overall deductions, and you should assess whether to use the standard deduction or your actual total deductions.

For pension schemes established as part of an employment relationship, the tax relief comes in the form of an exemption, meaning you do not need to include the contributions when calculating your taxable income. This applies to both employer and employee contributions.

Can I make additional payments before the Tax Agency sets up a obligatory pension for me?

Yes, you can. From 2019, the Tax Agency will issue a statement on pension contributions for the previous income year by August 31 each year. You will then be asked to pay any shortfall, which must be settled within four weeks.

How much will my withholding rate increase if I don’t meet the contribution requirements?

Your withholding rate will increase by the applicable contribution rate for the year the increase occurs. For example, for an employee, the withholding rate could increase by 6% in 2021 and again by 6% in 2022 if they failed to set up a pension scheme in 2020 or did not meet the contribution rate for that year.

For self-employed individuals, the rate could increase by 4% in 2022 and 5% in 2023. Since contribution rates increase by 1% each year until 2024 for both self-employed individuals and employees, withholding rates will similarly increase if the required contributions are not made.

Failure to contribute to a pension scheme could lead to significant increases in your withholding rate.

What happens if I leave Greenland?

If you leave Greenland and are no longer fully taxable in Greenland, you are no longer subject to the obligatory Pension Scheme law. You will no longer be required to contribute to a pension scheme.

The contributions made before your departure can remain in the pension scheme until you retire, or you can transfer them to another pension provider. If you choose to move the scheme out of Greenland, a 55% tax applies. Before making the transfer, check the tax rules in your new country of residence.

If you move out of Greenland, familiarize yourself with the tax laws in the destination country. Greenland has several double taxation agreements with other countries.

If you move to Denmark, see the section on Greenland’s double taxation agreement with Denmark.

Procedure

When you have submitted the documentation for your pension contribution, it will be registered with the Tax Agency.

The Tax Agency will review your submitted documentation.

You can expect to receive a response within at least 4 weeks. In December, you will receive a new tax card with the correct withholding tax rate for the following year.

Deadline

You should contribute to your pension scheme regularly throughout the year. If you make contributions afterward, you should pay before November 1 to ensure that your tax card is issued without an increased withholding rate.

You need to send the documentation for your pension contribution to the Tax Agency at tax@nanoq.gl.

Consequences of Missing the Deadline

If you miss the deadline, for example, for 2021, the unpaid contribution will be deducted via your withholding tax rate in 2023 if you:

• Have not made the payment.
• Have not documented the payment to the Tax Agency.

Iniatisisartut law on obligatory pensions.