Social Security Reform in Denmark

Recent social security reforms in Denmark have had the effect of simplifying program administration and expanding the means-testing of benefits, thereby presumably reducing future program costs.’ At the beginning of 1984, the three old-age, survivor, and disability insurance (OASDI) groups were reduced to only two groups-old-age pensioners in one, and all other potential social security recipients in the other. The use of means-testing was expanded, particularly in the latter, catchall category, where certain disability supplements previously were exempt from means-testing. In addition, an income test for old-age pensioners aged 67-69 was instituted in 1984. The overall result was an expansion of means-testing provisions in Danish social security. The implementation of this new policy was facilitated by the 1973 administrative social security reform that transferred social service resources, including personnel, from the national to the county and municipal levels. By establishing a single point of contact at the local level for the entire range of social services, it became easier to evaluate the total need of individuals and families and to make these services more accessible to all. The 1984 legislation affected only the basic universal pension within the OASDI program-the first tier of the two-tiered social security program in Denmark. Paid on the basis of birthright and/or residency, this universal pension constitutes the main portion of the OASDI benefit program. The employment-related program-the second tier-which provides a relatively modest benefit that is adjusted according to length of employment, without taking into consideration the level of earnings of the recipient, remains unchanged and is not discussed in this note.