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READER QUESTIONS

Ten key questions to help you plan your Swedish pension now

Pension-planning is an important part of keeping on top of your personal finances, and that's true whether you've moved to Sweden for the long haul, plan to stay for just a few years, or are choosing to retire to the Scandinavian country.

Ten key questions to help you plan your Swedish pension now
Don't miss out on maximising your pension just because you're living abroad. Photo: Fredrik Sandberg/TT

How many parts is your Swedish pension divided into?

Your pension, or the money you receive once you stop working, comes from three sources: the state, your employer, and any private pensions accounts you have set up yourself.

Everyone who spends time living and working in Sweden is entitled to the state pension, which itself is made up of two parts. A total of 16 percent of your taxable income is paid into your “income pension”, while a further 2.5 percent goes into funds. It’s the employer who pays this, and as an employee there’s nothing you need to do about it (the fee is fixed and it’s obligatory for employers to pay it) other than knowing that it’s there.

The occupational pension is also paid by the employer and is offered to most employees in Sweden, but the amounts vary. And the private pension is the third source, which you might set up through a bank, a capital insurance fund, or other forms of investment.

Is there an upper limit on pensionable income?

The higher your salary, the more money you’ll get in your state pension and occupational pension. But there is an upper limit. Your pensionable income includes your wages as well as all any other taxable benefits you receive in a given year such as paid sickness or parental leave.

But beyond an upper ceiling, you won’t receive any more money into your state pension. This limit is regularly adjusted but is set at 47,717 kronor ($5,094 in February 2022) per month for the income year 2022 and was 45,833 kronor per month for the income year 2021.

Do most workers have an occupational pension?

The majority of employees in Sweden will receive an occupational pension. In workplaces with a collective agreement, it’s common for 4.5 percent of your salary to be put into this pension pot. 

Workplaces without a collective agreement aren’t obliged to offer an occupational pension, but many do. As an employee, it’s important to speak to your manager or HR representative to find out the system at your company. Ideally, you should do this early on, and you might choose to negotiate a higher pension rate at the same time as you negotiate your salary.

When it comes to withdrawing your pension, be aware that some occupational pensions are paid out automatically but others need to be applied for.

Do you get a say in how your pension is saved?

This is another reason why it’s important to keep good track of your pension; not only so you’re aware of how much you’ve got, but because you can actually influence how and where it’s saved. 

In many cases, it’s possible to move funds for your occupational pension around. Again, this is something you can speak to your manager or HR department about.

And as well as the occupational pension, 2.5 percent of your state pension (this section is known as the premium pension) goes into investment funds. It’s the employer who pays this, but you can choose which funds your money goes into. If you don’t want to choose, your money will be invested by default in AP7 Såfa, the Seventh AP Fund (National Generation Management Option).

Will you get sent annual updates on your pension status?

Yes, but the further away from retirement you are, the less likely these are to be accurate.

Each spring, Swedish residents receive a bright orange envelope in the post, with information about the amounts in their pension pots and an estimate of how much you’ll be entitled to after retiring. These calculations are done on the assumption that by retirement you’ll have lived and worked in Sweden for at least 40 years, so for people who moved here as adults they are unlikely to be accurate.

If you want to keep track of your pension though, there’s no need to wait for this yearly reminder. You can log on at Minpension.se, a website run by the Swedish government and pension companies.

Look out for this orange envelope in your mail box. Photo: Fredrik Sandberg/TT

Are you entitled to your Swedish pension even if you move abroad?

If you choose to retire to a different country, or if you leave Sweden before retiring, you can still claim any pension earned while working in Sweden. This applies whether or not you have Swedish citizenship.

Several countries have pension agreements with Sweden, including all EU/EEA countries, the US, UK, India and Canada (find a full list here). In those countries, you can apply to the pension authority of your country of residence to start drawing your Swedish pension. If you live in a different country, you need to apply to the Swedish Pensions Agency directly for advice.

You only keep your guarantee pension (a basic level of pension for retirees on a low income; see below for more information) if you move to the EU/EEA, Switzerland and in some cases Canada, but you will keep your income pension and premium pension regardless of the country you move to.

Can you receive a ‘survivor’s pension’ if a deceased family member had a Swedish pension?

If your spouse or parent lived or worked in Sweden, in some circumstances you can apply for a survivor’s pension, even if you have never spent time living or working in Sweden yourself. The process is the same as above: in countries which have a pensions agreement with Sweden, contact the pension authority there, and in other countries, contact the Swedish Pensions Agency.

Does Sweden offer a state pension to those who lived on low or no income?

If you retire in Sweden after living on a low income or no income at all, you may well be entitled to what’s called a guarantee pension. Currently, this can be collected from the age of 65, but this may rise over the next few years.

The guarantee pension is calculated on the assumption you spent 40 years living in Sweden, so if you’ve lived in Sweden for a shorter time than this, you’ll be entitled to a smaller amount.

In order to receive this pension, you need to have been resident for at least three years, and the amount you receive is reduced by one fortieth for every “missing” year. So if you’ve lived in Sweden for 23 years, your guarantee pension would be reduced by 17/40. Exceptions are made for people who arrived in Sweden as refugees.

Is there a fixed retirement age?

You can start drawing your pension from the age of 62 if you wish (this limit will be raised in 2023).

There’s no upper limit, and you have the right to keep working until the age of 68. But in theory, you can keep working and earning towards your pension without starting to draw it for many years after this, as long as you agree that with your employer.

Can you claim overseas pensions in Sweden?

For internationals who choose to retire in Sweden, the biggest concern might be ensuring that their foreign pensions can be moved to their new country. Years spent working outside Sweden mean a loss in both Swedish state and occupational pension, but if you’re in a country that has a pension agreement with Sweden, you just need to inform the Swedish Pensions Agency that you’ve worked in those countries.

You’ll usually need to give details about the countries you’ve worked in, time spent in each one, and your national insurance number in those countries in order to access your state pension.

If you have private or occupational pensions overseas, you’ll need to get in touch with the relevant banks or funds in order to find out how to transfer these to Sweden.

And this also applies to state pensions earned while working in countries without a pension agreement with Sweden; you’ll need to contact the authorities in those countries to find out if and how you can access your pension.

This article was first published in March 2019, and updated in February 2022

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For members

ENERGY

EXPLAINED: When should I turn on my heating in Sweden this year?

Energy costs in Sweden are set to reach sky-high levels this winter, which will leave many people wondering when they should start heating their homes. Here's what you need to bear in mind.

EXPLAINED: When should I turn on my heating in Sweden this year?

What’s happening?

As a result of supply stoppages for cheap Russian gas affecting energy prices on the European market – particularly in Germany – energy prices in Sweden have been at record levels for months, especially in the two energy price zones in the south of the country.

With winter looming and no sign of things getting cheaper anytime soon, private individuals are starting to cut down on energy usage as much as they can to slash their bills this season.

Does it make a difference what type of accommodation I live in?

The right time to start heating your home depends on several factors including your own personal preference, the weather, whether you live in rented accommodation or own your own property, and on the age and features of the property you live in.

How does the heating system work in Swedish homes?

More than half of all houses and commercial properties in Sweden use district heating or fjärrvärme, with this number rising to around 90 percent for apartment buildings.

This system distributes hot water from heating plants to houses and apartments through underground water pipes, meaning that heating sources are centralised, rather than individual houses or apartments having their own heating source.

In smaller towns and in houses, district heating is less common, and it’s these households who can benefit the most from waiting longer to turn on their heating.

Do I control my heating?

It depends. If you live in a rented apartment or a bostadsrättsforening (co-operative housing association) with district heating, your landlord or the board of your housing foundation will usually decide for you when to turn your heating on.

Unlike other countries, Sweden has no official legal heating season, with heating in bostadsrättsföreningar usually switched on automatically following periods of cold weather, no matter which date they occur on.

This will usually be designed to provide an indoor temperature of around 21 degrees – you can turn your radiators down if you feel this is too warm, but you won’t usually be able to turn them up if you want the temperature to be warmer.

The Public Health Agency recommends temperatures of between 20 and 24 degrees indoors, with temperatures lower than 18 degrees in apartments posing a health risk.

Temperatures lower than 14 are not recommended as they can cause condensation and mould growth on walls and furnishings, which, again, are a health risk, and can cause permanent damage to properties.

Can I save money by waiting to turn my heating on?

Again, it depends. If you’re renting and you pay varmhyra – rent with heating included – then you won’t save money directly, but heating your home wisely could make it less likely for your landlord to raise your rent to cover increased heating costs.

If you pay kallhyra – rent without heating included, then waiting to turn on the heating will save money on your electricity bill.

Similarly, in some housing associations, electricity and heating costs are included in your monthly fee, meaning you pay your share of the heating costs for the entire building ever month. In this case, your energy costs are more affected by how much energy everyone else in your housing association uses than your individual usage.

On the other hand, this doesn’t mean you shouldn’t care about how warm your heating is – if you have your heating on full-blast for the whole winter, your costs will increase as well as the costs of all of your neighbours, and if the entire association’s energy costs increase substantially, the board may decide to raise the monthly fee or avgift for everyone in the building to cover this.

If you pay an individual energy bill based on your own household’s usage, and not on an average of the whole building, it could pay to wait before you switch on your heating.

How else can I save money on heating costs?

Turning your heating down a couple of degrees can make a big difference to your heating costs, but you can also save money on heating and make your property feel warmer by making it more energy effective.

There are a few easy ways to do this, according to the Swedish Energy Agency.

Firstly, make sure your house is well insulated, not just your doors and windows, but also in the loft: a large amount of a building’s heat escapes through the roof. This also applies to the boundaries between well-insulated and poorly-insulated areas.

If you have a cellar or conservatory, for example, which is not heated and not insulated, make sure the door between this room and the rest of the house is well-insulated with no gaps around the doorframe where heat can escape into the colder room. 

In a similar vein, locate any drafts and do what you can to block them, either with draft excluders or by replacing worn-out draft excluder strips on old doors and windows.

You can also benefit from thinking about how you furnish your home – furniture placed in front of radiators mean it is harder for warm air to circulate, and you can keep your house warmer at night by closing your curtains or blinds to keep eat from escaping through your windows.

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