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PENSIONS

Sweden to increase retirement age from next year

A proposal for changes to Sweden’s pensions system could see incremental increases to retirement age beginning next year.

Sweden to increase retirement age from next year
Photo: Hasse Holmberg/TT

The proposal for reform to state pensions has been agreed on by parties on both sides of the political aisle, reflecting the political agreement which provided for the new Swedish government.

Later retirement age has been justified by the claim that people in Sweden “live longer and healthier lives”, but the last twelve years of life remain characterised by illness and failing health, news agency TT writes.

According to the proposal, the minimum age at which a state pension may be drawn will increase next year from 61 to 62 years. The right to retain employment, the so-called LAS age, will also be increased, from 67 to 68 years.

“We see a problem with the fact that people who want to continue working are not able to. We will now give people the opportunity to do that,” said Mats Persson of the Liberal party, who was part of the parliamentary group behind the proposal.

In 2023, retirement ages will increase again, with the minimum state pension age changing to 63 and the LAS age to 69. The so-called guaranteed pension, which is paid to those who have had little or no pension-qualifying income during their working lives, will also see an increased age limit from 65 to 66 years.

2026 will see further extensions, to 64 years and 67 years for the regular and guaranteed pensions respectively.

In a press statement, the government wrote that longer and healthier lives made the reforms to retirement age possible. Average life expectancy in Sweden has been found to increase by 3.5 hours every day.

But longer life expectancy does not necessarily correspond to better health in senior years, according to research.

International studies led by the Institute for Health Metrics and Evaluation (IHME) and the University of Washington recently found that Swedes have relatively high life expectancy – just under 82 years for both women and men – but that years with good health are considerably fewer, at just under 70 years.

Sweden fell outside of the top ten for countries with the most years of good health, the study found. Japan was the best-performing country, followed by Singapore, Andorra, Iceland and Cyprus.

The pensions proposal could therefore mean that retirement years will become increasingly unlikely to contain many years in which senior citizens can enjoy good health.

Persson told TT he disagreed with that conclusion.

“This agreement is based on the fact that we live longer as well as healthier lives. There is research to support that,” he said.

READ ALSO: How to manage your pension in Sweden – even if you're not planning to stay

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COST OF LIVING

EXPLAINED: How Americans can retire in Switzerland

A tranquil, peaceful and safe country, Switzerland's appeal is undeniable. Here's how Americans can retire in Switzerland.

Two people hold up their American passports in a European town square
While it is not easy for Americans to retire in Switzerland, it is fortunately not impossible. Here's what you need to know. Photo by Spencer Davis from Pexels

With clean streets, tranquil vibes and low crime rates, Switzerland is a perfect place to retire. 

People from across the world have flocked to Switzerland to spend their later years, with American singer Tina Turner, Canadian singer Shania Twain, British musician Phil Collins and Swedish businessman Ingvar Kamprad – of IKEA fame – among the many who have all chosen to spend their twilight years in the alpine nation. 

For Americans – or indeed anyone – looking to retire in Switzerland, the good news is you don’t need to be world famous in order to do so. 

You will however need to jump through a few hoops. 

The rules for retiring differ on the basis of whether you are from an EU/EFTA state or not, with the US, UK, Australia, India and Israel being some of the many examples of ‘third countries’. 

If you are not American, click the following link for information on how to retire in Switzerland. 

READ MORE: Everything you need to know about retiring in Switzerland

Here’s what you need to know. 

How can Americans retire in Switzerland

There are two broad categories of Americans wanting to retire in Switzerland: those who already live here with valid working permits – and those who still live in the United States. 

If you worked or are working in Switzerland on a valid residence permit, retirement is unlikely to be difficult at all. 

Switzerland has a retirement age of 65 for men and for women. The retirement age for women was raised from 64 to 65 in June 2021. 

If you fit into this category, then please check our our extensive guide on pensions in Switzerland. 

EXPLAINED: How does the Swiss pension system work – and how much will I receive?

But if you currently do not live in Switzerland/have a Swiss residence permit and would like to retire here, this is still possible. 

How can non-residents including Americans retire in Switzerland? 

In order to be granted a visa to retire in Switzerland, you need to have: 

  • Adequate financial resources and proof you will not look for work in Switzerland;
  • A close connection with Switzerland;
  • You must have Swiss health and accident coverage.

These points are dealt with individually below. 

How does the process work?

If you come from outside the EU / EFTA, you must apply for a visa with a Swiss diplomatic/consular mission in your country of residence, i.e. in the United States. 

First, they will check that you don’t have any criminal records.

You must be 55 years of age or older to move to Switzerland from abroad in order to retire. The Swiss retirement age is 65. 

You will need to demonstrate a close link to Switzerland.

This can be past residency, family ties or even frequent holidays in Switzerland can suffice as evidence of a close connection. 

Real estate can be a factor, although keep in mind that owning property in Switzerland is no guarantee of a close connection. 

Reader question: Does owning a second home in Switzerland give me the right to live there?

Also, in order to be considered, you must prove that you have enough financial resources to live in Switzerland without having to work or claim welfare benefits.

You do not have to transfer the bulk of your financial interests to Switzerland, although this is likely to help illustrate that you have enough financial resources to move there. 

You can transfer your pension to Switzerland provided there’s a bilateral arrangement with your country of origin. More information is available here. 

READ MORE: How to get a visa to retire in Switzerland

The eventual decision is made by cantonal authorities and is often highly discretionary.

Tina Turner, who has lived in Château Algonquin in Küsnacht, Zurich, since 1994, is perhaps the most prominent American who has retired in Switzerland. 

While speaking a Swiss language is a pre-requisite of citizenship, as with plenty of other things, the authorities appear willing to make exceptions when the price is right or when you’re the honorary mayor of Nutbush City.

Turner gave up her American citizenship in 2013 and became a Swiss citizen, despite not speaking German, French or Italian.

Which brings us to…

Money helps grease the wheels

A little-known article of the Swiss law — Article 30 of the Federal Aliens Act — allows wealthy foreigners from outside Europe to move to Switzerland.

Cantons can issue residence permits B to these people, if local authorities deem that there is a “significant fiscal interest” in such a move.

Golden visas: Everything you need to know about ‘buying’ Swiss residency

What exactly does “significant fiscal interest mean?” 

This term is defined by each canton.

For instance, the lowest annual tax rate for a non-EU foreigner is 287,882 francs in Valais, 312,522 francs in Geneva, and 415,000 Vaud. 

Every year, around 40 to 50 people ‘buy’ their way into Switzerland this way, as reported by TagesAnzeiger, which used the numbers published by the State Secretariat for Migration (SEM).

How much should you save for a ‘comfortable’ retirement in Switzerland?

To maintain the usual standard of living during retirement, residents of Switzerland need more savings nowadays than four years ago, according to an analysis by UBS bank, which compared the pension systems of 24 countries.

In 2017, the last time UBS conducted a similar study, that number was 11 percent.

The new UBS International Pension Gap Index found that “the Swiss pension system still enjoys a high reputation. However, contrary to other countries, it is more difficult to push through urgently needed reforms to ensure this reputation will last”.

Click the following link for more information

READ MORE: How much should you save to retire in Switzerland?

Please note: As with all of our explainers, they are intended as a guide only and do not constitute legal or financial advice. Please discuss any financial decisions with a certified expert in the field. 

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