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# Table of Contents

|I. Introduction ..................................................................................................................... 1|
|---|
|II. Structure of the Danish Pension System ........................................................................ 4|
|A. Public Pension Schemes............................................................................................. 4|
|Social Pension............................................................................................................. 4|
|ATP (Labor Market Supplementary Pension Scheme)............................................... 5<br>|
|B. Occupational Pensions ............................................................................................... 6|
|Non-Statutory Occupational Pension Plans................................................................ 7|
|Statutory Supplementary Schemes ........................................................................... 11|
|C. Personal Pensions..................................................................................................... 12|
|D. Asset Accumulation and Investment Performance.................................................. 13|
|E. Market Concentration............................................................................................... 18|
|F. Retirement Products.................................................................................................. 19|
|G. Risk-Sharing Characteristics.................................................................................... 21|
|H. Replacement Ratios.................................................................................................. 23|
|III. Regulation and Supervision........................................................................................ 27|
|A. Overview.................................................................................................................. 27|
|B. Solvency Rules, Investment Rules and Stress Testing............................................. 28|
|C. Register of Assets Covering Technical Provisions .................................................. 29|
|D. Valuation Rules - Assets.......................................................................................... 30|
|E. The Prevalence of With-Profits Contracts................................................................ 30|
|F. Use of the Contribution Principle............................................................................. 32|
|G. Valuation Rules - Liabilities .................................................................................... 34|
|Decomposition of Technical Provisions................................................................... 34|
|Assumptions Governing Technical Provisions......................................................... 35|
|H. Market-Value Accounting Rules - Some Examples ................................................ 36|
|Effects of Changes in the Market Interest Rate ........................................................ 38|
|<br>Effects of Changes in Equity Prices.......................................................................... 40|
|I. Guidance on Market Discipline................................................................................. 42|
|J. Evaluation of Experience with Guidance on Market Discipline............................... 44|
|K. Market Values and the Choice of Discount Rate..................................................... 46|
|Introduction of a Yield Curve................................................................................... 47|
|L. Treatment of Risk and Uncertainty .......................................................................... 49|
|M. The Traffic Light System ........................................................................................ 49|
|Asset Risks................................................................................................................ 50|
|Currency Risk ........................................................................................................... 50|
|Risks in Subsidiary Companies ................................................................................ 51|
|Risks Associated with Real Estate Properties........................................................... 51|
|Taxation (Tax Assets)............................................................................................... 51|
|Liability Risks (Insurance Provisions)...................................................................... 51|
|Calculation of the excess Capital Base is made in the following order:................... 51|
|N. Evaluating the Traffic Light System........................................................................ 51|
|<br>O. Risk-Based Capital Requirements ........................................................................... 53|
|IV. Efficiency of Risk Sharing Arrangements.................................................................. 55|
|A. Introduction.............................................................................................................. 55|