Reader question: Is it possible to transfer a foreign pension to Sweden?
A lot of people who move to Sweden do so mid-career. A UK reader asked us if it was possible to transfer an overseas occupation pension to Sweden. You can but it's not always worth it.
"Hello, I have just hit 50 and have started to think about my pension," the reader writes. "I worked pretty much constantly after I graduated, including a few years for the UK National Health Service. Is it possible to transfer that into my Swedish fund?"
Monica Zettervall, a pensions expert at the Swedish Pension Agency, said that while the transfer of an overseas state pension happens almost automatically, it was less common for people to transfer an overseas occupational pension into their Swedish tjänstepension.
READ ALSO: What are The Local's reader questions?
State pension
The transfer of the basic state pension from other countries where you have lived and worked happens almost automatically. When you retire, the agency asks you about any entitlements to a state pension you might have from overseas.
"When you apply for your Swedish pension, it asks you on the form if you have lived overseas, and if so, when you were working. You also have to give your social security number," Zettervall said. "Then we contact their authorities."
The Swedish Pension Agency will then pay out any state pension you might have accrued overseas together with your Swedish state pension.
Overseas occupational pension
Transferring an overseas foreign pension to Sweden is more difficult.
The bank Nordea and the pension company Futur Pension are the only two providers in Sweden who accept transferred foreign pensions, and, as far as the UK is concerned at least, they are also the only two companies accepted as "Qualified Recognised Overseas Pensions Schemes" (QROPS).
Nordea will handle both the transfer of an overseas pension and act as a pensions manager, whereas Futur Pension will hold the funds, but works with clients through two financial advisory firms, Max Matthiessen and Söderberg and Partners.
"The process depends on different factors - for example country, insurance company and former employer," said Anne Höglund, Head of Insurance Specialists at Nordea. "As long as we are informed that the pension is transferable the process itself is straightforward. Different countries and companies has different requirements for transferring and Sweden has its own laws and rules that will apply for the pension when it arrives in Sweden."
On its website, Nordea says that it is able to move over pensions from EU agencies, the UK, Ireland, Luxembourg, The Netherlands, Jersey, Malta, Belgium and Norway - so long as you have lived there less than 3 years.
Max Matthiessen will handle pensions from all of the above, but also transfers pensions from France, Guernsey, and Isle of Man.
Ahmed Ben Moussa leads the foreign pensions team at Max Matthiessen. Photo: Max Matthiessen
What is the point of transferring an overseas pension?
Ahmed Ben Moussa, who runs the foreign pensions division at Max Matthiessen, told The Local that there were several advantages in consolidating your pension in one country.
"Max Matthiessen’s perception is that the advantages of transferring a workplace pension from other countries is to make it easier when you retire by collecting your pension funds in the same country as where you live," he said.
"And not just easier. “You might have other options in the country, for example, you might be able to access a wider range of investments and get the potential for more flexibility over how you access your funds when you retire, and you might be offered more flexibility over who you can pass your pension on to when you die.”
Some clients were also worried about the risk of double taxation, he added.
"Our perception is that some clients are worried about double taxation and have therefore transferred to the county where they live. However, we always inform our clients that we are not tax advisors and that we cannot give them any tax advice. We always refer our clients to tax advisors if they have any tax questions, we can only assist them with transferring the funds to Sweden.”
One advantage for people living in Sweden is that all of your pension is visible on the Min Pension website, giving you much greater visibility over how much you stand to receive.
Anne Höglund, Head of Insurance Specialists, is the Nordea spokesperson on foreign pensions. Photo: Nordea
How does a transfer of an overseas occupational pension take place?
Ben Moussa said that the first step is always to collect information from the overseas pension provider on its management fees, fund fees, exist fees and any possible charges.
"Before we can make any QROPS (Qualifying Recognised Overseas Pension Scheme) transfer, we inform our clients that we need information about for example what pension product the client has, which fees they are paying, and how they are invested and transfer out forms. Some clients want to collect everything by themselves, and some clients want us to help them with everything from A to Z through an information power of attorney.
He said that only Max Matthiessen handled the information gathering itself, with Nordea requiring the customer to collect this information.
The transfer advisor then has a mandatory financial advisory meeting with the client, where they compare what they have in the UK, what they pay for their pension, and how this would compare to what they would be offered in Sweden. The client then decides whether to go ahead, after which the process takes between six months and a year.
Can all foreign pensions be transferred to Sweden?
Not necessarily. One issue is whether you have a "defined contribution", based around what you have paid in, or a "defined benefit" or "final salary" pension, in which the provider commits to a certain payout.
"Transfer of a final salary pension is possible, even if there are rules to consider," Höglund said. "Depending on scheme and volume, the customer might need a contact with a British advisor."
However, Ben Moussa said that both Nordea and Futur Pension, while willing to transfer both types of pension, will convert "defined benefits" pensions to "defined contribution" pensions once the funds are in Sweden.
One client from the UK, who had a defined benefits pension from the National Health Service, he said, had been unable to transfer his pension to Sweden because the NHS Pension Scheme would only accept the transfer to another defined benefits scheme.
What fees are charged?
Max Matthiessen and Söderberg and Partners both take commissions from Futur Pension for any funds transferred to them by their clients, both from overseas and from other pension providers in Sweden. Depending on the amount of funds being transferred, they might also often charge a fee to the client.
Höglund said that Nordea Life & Pension "doesn’t charge the client for the process of transferring pension rights to Sweden", but you may find fund management charges increase.
Zettervall said that she was unconvinced of the benefits of transferring an overseas occupational pension to Sweden.
"Normally, people don't move their overseas occupational pensions to Sweden," she said, adding that anyone doing so should keep a close look on the charges levied by the company carrying out the transfer.
"You need to keep track of the costs. You don't want to pay them too much of your pension to do this for you."
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"Hello, I have just hit 50 and have started to think about my pension," the reader writes. "I worked pretty much constantly after I graduated, including a few years for the UK National Health Service. Is it possible to transfer that into my Swedish fund?"
Monica Zettervall, a pensions expert at the Swedish Pension Agency, said that while the transfer of an overseas state pension happens almost automatically, it was less common for people to transfer an overseas occupational pension into their Swedish tjänstepension.
READ ALSO: What are The Local's reader questions?
State pension
The transfer of the basic state pension from other countries where you have lived and worked happens almost automatically. When you retire, the agency asks you about any entitlements to a state pension you might have from overseas.
"When you apply for your Swedish pension, it asks you on the form if you have lived overseas, and if so, when you were working. You also have to give your social security number," Zettervall said. "Then we contact their authorities."
The Swedish Pension Agency will then pay out any state pension you might have accrued overseas together with your Swedish state pension.
Overseas occupational pension
Transferring an overseas foreign pension to Sweden is more difficult.
The bank Nordea and the pension company Futur Pension are the only two providers in Sweden who accept transferred foreign pensions, and, as far as the UK is concerned at least, they are also the only two companies accepted as "Qualified Recognised Overseas Pensions Schemes" (QROPS).
Nordea will handle both the transfer of an overseas pension and act as a pensions manager, whereas Futur Pension will hold the funds, but works with clients through two financial advisory firms, Max Matthiessen and Söderberg and Partners.
"The process depends on different factors - for example country, insurance company and former employer," said Anne Höglund, Head of Insurance Specialists at Nordea. "As long as we are informed that the pension is transferable the process itself is straightforward. Different countries and companies has different requirements for transferring and Sweden has its own laws and rules that will apply for the pension when it arrives in Sweden."
On its website, Nordea says that it is able to move over pensions from EU agencies, the UK, Ireland, Luxembourg, The Netherlands, Jersey, Malta, Belgium and Norway - so long as you have lived there less than 3 years.
Max Matthiessen will handle pensions from all of the above, but also transfers pensions from France, Guernsey, and Isle of Man.
What is the point of transferring an overseas pension?
Ahmed Ben Moussa, who runs the foreign pensions division at Max Matthiessen, told The Local that there were several advantages in consolidating your pension in one country.
"Max Matthiessen’s perception is that the advantages of transferring a workplace pension from other countries is to make it easier when you retire by collecting your pension funds in the same country as where you live," he said.
"And not just easier. “You might have other options in the country, for example, you might be able to access a wider range of investments and get the potential for more flexibility over how you access your funds when you retire, and you might be offered more flexibility over who you can pass your pension on to when you die.”
Some clients were also worried about the risk of double taxation, he added.
"Our perception is that some clients are worried about double taxation and have therefore transferred to the county where they live. However, we always inform our clients that we are not tax advisors and that we cannot give them any tax advice. We always refer our clients to tax advisors if they have any tax questions, we can only assist them with transferring the funds to Sweden.”
One advantage for people living in Sweden is that all of your pension is visible on the Min Pension website, giving you much greater visibility over how much you stand to receive.
How does a transfer of an overseas occupational pension take place?
Ben Moussa said that the first step is always to collect information from the overseas pension provider on its management fees, fund fees, exist fees and any possible charges.
"Before we can make any QROPS (Qualifying Recognised Overseas Pension Scheme) transfer, we inform our clients that we need information about for example what pension product the client has, which fees they are paying, and how they are invested and transfer out forms. Some clients want to collect everything by themselves, and some clients want us to help them with everything from A to Z through an information power of attorney.
He said that only Max Matthiessen handled the information gathering itself, with Nordea requiring the customer to collect this information.
The transfer advisor then has a mandatory financial advisory meeting with the client, where they compare what they have in the UK, what they pay for their pension, and how this would compare to what they would be offered in Sweden. The client then decides whether to go ahead, after which the process takes between six months and a year.
Can all foreign pensions be transferred to Sweden?
Not necessarily. One issue is whether you have a "defined contribution", based around what you have paid in, or a "defined benefit" or "final salary" pension, in which the provider commits to a certain payout.
"Transfer of a final salary pension is possible, even if there are rules to consider," Höglund said. "Depending on scheme and volume, the customer might need a contact with a British advisor."
However, Ben Moussa said that both Nordea and Futur Pension, while willing to transfer both types of pension, will convert "defined benefits" pensions to "defined contribution" pensions once the funds are in Sweden.
One client from the UK, who had a defined benefits pension from the National Health Service, he said, had been unable to transfer his pension to Sweden because the NHS Pension Scheme would only accept the transfer to another defined benefits scheme.
What fees are charged?
Max Matthiessen and Söderberg and Partners both take commissions from Futur Pension for any funds transferred to them by their clients, both from overseas and from other pension providers in Sweden. Depending on the amount of funds being transferred, they might also often charge a fee to the client.
Höglund said that Nordea Life & Pension "doesn’t charge the client for the process of transferring pension rights to Sweden", but you may find fund management charges increase.
Zettervall said that she was unconvinced of the benefits of transferring an overseas occupational pension to Sweden.
"Normally, people don't move their overseas occupational pensions to Sweden," she said, adding that anyone doing so should keep a close look on the charges levied by the company carrying out the transfer.
"You need to keep track of the costs. You don't want to pay them too much of your pension to do this for you."
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