Special pensions

WHO pensioners in Denmark

31March 2005 is the deadline for WHO pensioners residing in Denmark to inform the tax authorities if they want to switch to taxation under the law on taxation, or about their choice of how their income should be taxed. If they do it by this deadline, the new regulations for tax exemptions will be applied to their case for one year retroactively, i.e. from 01.01.2004. The new regulation has finally put all Denmark-based UN pensioners in a position of equality, no matter when they joined the UN Joint Pension Fund (before or after February 1992).

What's new?

On 17 December 2004, the Danish parliament finished its third reading of the proposed amendments of the Danish law which regulates taxation of certain foreign pensions (law No 429/ 26.061998). According to this amendment, all current and future pensioners of WHO and, for that matter, of any UN agency, who choose to reside in Denmark and who joined the Pension Fund prior to February 1992, will be now taxed equally, regardless of their date of entry into the UN Pension Fund. In practical terms this means that each such pensioner will have the opportunity to choose to be taxed on the accrued annual interest of their «capital» in the Pension Fund.

What’s old?

Before the amendment came into force a month ago, there was inequity between two groups of former WHO staff – the ones who had joined the UN Joint Pension Fund before or after February 1992. The first group was taxed on their monthly income (their pensions), while the second group was taxed only on the interest of the pension paid out each year.

How did it go?

The process for ensuring equity for pensioners was formally started in spring 2004 when WHO administration approached the Danish Ministry of Taxation, speaking out for all WHO staff’s right to be treated equally by the hosting country. Although this was originally initiated in the interest of WHO pensioners, the case was applicable for all UN staff. The text of the amendments was drafted by the Ministry of Taxation and submitted to the Danish Parliament in summer 2004. Within few months, there was a very speedy process of going through all the formal parliamentary proceedings for receiving technical comments and for three consequent readings, and the amendment was put into force. Overall, though, this amendment only removes a timeconstraint «Rubicon» in the law on taxation of foreign pensioners which does not refer specifically to UN pensioners and has not been introduced by the Danish state concretely for the benefit of present and future UN pensioners.

What’s on now?

WHO is pursuing its discussions with the tax authorities on the last pending point i.e. the taxation of interest, and options are being negotiated. An agreement with the tax authorities on how and to which extent the capital interest should be taxed is foreseen shortly. As soon as such an agreement has been reached, a briefing will be held to inform staff about the outcome.