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Swedes risk double tax over pension change

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Swedes risk double tax over pension change
The 'orange envelope' containing annual pension statements. Photo: TT
12:00 CEST+02:00
Many Swedes risk paying double tax on their savings following changes to private pensions rules, experts warn.
Changes introduced at the beginning of the year mean that it is only possible to deduct tax on savings up to 1,800 kronor ($210) per year, down from the previous 12,000 kronor.
 
"There are variations, but many have not amended their savings," said Monica Petersson at the Pensions Agency (Pensionsmyndigheten).
 
This is the impression she has been given after talking with several financial firms.
 
A survey by financial services and pensions firm Avanza showed that only half of respondents confirmed that they had changed their savings.
 
"More active groups (of savers) have made note of this, but the more passive groups have not," said Claes Hemberg at Avanza.
 
"It's not that odd really. These are savings begun a long time ago, which have just continued and with which you don't interfere."
 
Before the changes which came into force on January 1st 2015, the average saver put away some 470 kronor and thus most will have reached the 1,800 kronor limit by end of April.
 
Many people who save more will have already passed the 1,800 kronor deduction and will thus have already paid double taxes on their savings.
 
The idea with the system was that no income tax would be paid on the money until it is taken out in the form of a pension.
 
Swedes have been forced to re-think their pensions savings with many opting for endowment plans.
 
"Endowment plans are those which pretty much all financial services firms have suggested. But there are charges and the savings are locked in," Hemberg said.
 
"It doesn't have to be a bad idea, but you should keep a check on the conditions offered," he added.
 
Other alternatives recommended are investment savings accounts (ISK) and salary exchange, an option for high earners. 
 
Sole proprietors are still entitled to pension savings deduction but as company profits are affected so are the level of contributions to the general (state) pension.
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