(edit title) Is it true you get 50% of your pension back on tax Overheard a conversation and wondering... Options

[Darwinder]

Hey guys,

I understand in Sweden you can set up a private pension contribution up to a max of 12000kr a year I believe per person that can compound tax free until your over 50 (or 60?) but I overheard a guy yesterday saying that you also get 50% of your contributions back on your tax return yearly, is this true? I havent been paying into the private pension because I always believe its better to have my money where I can touch it if a good opportunity comes along, but if the government is willing to throw me back an extra 6k a year for free then I may just change my mind. Was he speaking the truth or splattering nonsense?

Thanks

[Kibiri]

That 12000 becomes tax free, reducing your taxable income. So you gain based on how much tax you are paying. If highest part of your income is subject to 50% tax, then you can say you get back 50%.

[Yorkshireman]

You can pay anything You like into a private pension each year, it doesn't even have to be monthly paid. However the deduction on the declaration only counts to a maximum 12.000. If you find a scheme that will allow you to, then you could just pay the 12.000 in December each year

The final pension is taxed as income.

If You are self-employed you can not only deduct the 12.000 but also an additional 35% of your income, to a maximum amount of roughly 440.000 for the year 2012.

[Essingen]

If you are employed and have an employer that runs such a scheme, you can also have salary exchange whereby you forgo a portion of your salary in return for pension contribution. This is in addition to the SEK 12,000 and is worth doing if you pay higher rate tax.

[Darwinder]

Hmmm, well I think I have been a bit bamboozled here because this program sounds a lot better than I was led to believe. I was basically told by friends that you can put up to a max of 12k a year into a private pension plan that can compound tax free until your over 60 I believe when you can finally touch it. But if you can infact declare that 12k and get 30-40% back for free every year that sounds like a fine investment. Will talk with my bank, thanks for the insight guys.

[Silberfüchschen]

I assume that you earn enough to pay state tax. Otherwise, you will likely not benefit from postponing the taxation.