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WORKING IN SWEDEN

How to maximise your Swedish pension – even if you’re not planning to stay

In the excitement of getting stuck into life in a new country and tackling all the challenges that presents, it's easy for pensions to slip down the list of things to keep track of. But don't let it fall off the radar, follow The Local's guide to manage your Swedish pension.

Published: 23 February 2018 12:36 CET
Updated: 17 March 2024 08:28 CET
How to maximise your Swedish pension – even if you're not planning to stay
If you're working in Sweden, you're probably entitled to a pension. Here's what you need to know. Photo: Janerik Henriksson/TT

The Swedish pension is part of the country’s social insurance system, and it can seem like a confusing beast at times. The good news is that if you’re living and working here, you’ll almost certainly be earning towards a pension, and you’ll be able to get that money even if you move elsewhere before retirement.

Exactly how much money goes into your pension pot depends on many factors, including your salary, length of time working in Sweden, your company’s policy, and your own personal decisions (especially if you’re self-employed).

Those who spend only a few years working in Sweden will earn a much smaller pension than people who work here for their whole lives, but that money could still come in useful once you retire, so it’s important to know what you’ll be entitled to.

The easiest way to understand how the Swedish pension works is breaking it down into three parts. There are three different sources for the Swedish pension: the state, your employer, and yourself.

First, there’s the state/general pension (allmän pension), which comes from money paid in tax, and makes up the biggest part of most people’s total pensions. It falls under the remit of the Pensionsmyndigheten or the Swedish Pensions Agency, a government authority dedicated to, you guessed it, pensions.

Absolutely everyone who has worked and paid tax in Sweden is entitled to this pension, and it’s split into two parts: an income pension and a premium pension.

The income pension (inkomstpension) makes up the bulk of this. Each year, 16 percent of your income is paid into this pension. In this context, ‘income’ includes wages as well as all other taxable benefits such as paid sickness or parental leave, and unemployment benefits.

It’s the employer who pays this, as part of the fees associated with employment, so you won’t see it deducted from your salary and there’s nothing that you as an employee need to do. The higher your salary, the higher the income pension will be, although once you reach the upper limit on pensionable income, your state pension won’t increase any further. This limit is regularly adjusted but is set at 51,208 kronor per month for the income year 2024, or 614,500 kronor a year.

On top of the income pension, a further 2.5 percent of your income goes into investment funds (the premium pension or premiepension). Again, this is paid by the employer, but if you want to, you can choose which funds your money goes into. If you do not make a choice, your money will be invested in AP7 Såfa, the Seventh AP Fund (National Generation Management Option) which is the default option.

If you do want to move your funds, this can be done as often as you want, for free, by logging into the Swedish Pensions Agency’s website using BankID. You can have up to five funds at the same time, and there is a list of all the available funds on the website, which also offers advice on factors to bear in mind when selecting which ones to put your money in.

However, bear in mind that the premium pension is only equivalent to 2.5 percent of your income, so if you’re feeling overwhelmed, it’s more beneficial to focus on maximising your occupational and private pensions than the premium.

Those who live on a low income or no income while in Sweden may also be entitled to a so-called guarantee pension (garantipension) once you retire, which ensures you get a basic minimum pension regardless of your salary status while working. 

It is also calculated on the assumption that you lived in Sweden for at least 40 years (though there are special rules for those who arrived in the country as refugees), so if you live in Sweden for less than that, you’ll receive a smaller proportion. You have to have lived in Sweden for at least three years to receive it at all.

The guarantee pension can be collected from the age of 66 (before 2023 it was from the age of 65). This is the one component of the pension which you may not have access to if you later move abroad; as of 2023 Sweden no longer offers the guarantee pension to people who move abroad.

Overall then, the amount you receive as state pension is impossible to calculate in advance, and will depend on: your salary, which other benefits you receive, how long you work in Sweden, and when you start drawing your pension.

For context, the average general pension of people living in Sweden was 14,400 kronor before taxes per month in 2022, and made up around three quarters of the average person’s entire pension, but if you spend a large part of your working life in a country other than Sweden, that amount will be smaller.

After the state pension, the second potential component of the Swedish pension comes from your employer and is known as the occupational pension (tjänstepension). This will typically make up between 20 and 30 percent of your Swedish pension, but for high earners may be considerably more.

Most employees (90 percent, according to figures from the Swedish government) are entitled to some form of occupational pension, but exactly what this includes varies from workplace to workplace. Make sure to speak to someone from your workplace or trade union, if applicable, to ensure you understand what you’re getting. Be aware also that some companies have a lower age limit at which they start paying occupational pensions, or may pay different amounts for employees of different ages. 

In many workplaces, pension arrangements are decided based on agreements between unions and employers known as “collective agreements” (kollektivavtal). There are four main occupational agreements in Sweden, so find out which, if any, your workplace belongs to. 

If you have a collective agreement, the usual situation is that 4.5 percent of your salary up to a monthly ceiling will be paid into your occupational pension. In some cases, the employee has the option to choose which funds their pension is invested in, so you may be able to move your funds around, as with the premium pension.

In some sectors, there are no collective agreements, and in that case it’s up to the employee to negotiate an occupational pension with their employer – which they are not obliged to offer. 

If you’re self-employed in Sweden, or don’t have an occupational pension, you may choose to make individual contributions to compensate. As a rough guide, it’s a good idea to save around 4-5 percent of your monthly salary. And if you run your own business, you can make your own contributions towards an occupational pension, called owner’s contributions.

The third source of pension money is a private pension (privat pension), which you can set up if you want to put some of your own money towards retirement. There are various ways to do this: a private pension fund through a bank; a capital insurance fund (kapitalförsäkring); or by investing in stocks, property, or other assets. If you’re not planning to stay in Sweden long-term, it may well make sense to keep these savings in another country, if possible.

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

So, how do you keep track of these different funds? In Sweden this is actually really easy.

Each spring, you’ll receive a bright orange envelope from the Swedish Pensions Agency, which provides a breakdown of how much you’ve saved for your state pension so far, as well as a forecast of how much you’ll be able to withdraw when you retire, based on current data.

Plenty of Swedes dread or ignore the arrival of the envelope, but it’s useful to familiarise yourself with the information. You can also check the status of your state pension at any time by logging onto the “Mina Sidor” (My pages) section of the Swedish Pensions Agency’s website.

Be aware though that this is only a rough estimate, and the further from retirement you are, the less accurate it is, since the factors that determine pension amounts change regularly. It’s also calculated on the assumption that you’ll live and work in Sweden for at least 40 years, meaning the estimates are generally much higher than the real amount many immigrants will receive.

If you want to review all three parts of your pension – state, occupational, and private – you can check this online at Minpension.se, a website run by the Swedish government and pension companies. This is also helpful if you’re unsure whether your previous employers in Sweden had occupational pensions. Be aware that a small proportion of pensions won’t be visible through the website, but according to the site, 90 percent of people should be able to see their full pension.

Knowing that the money’s there is all well and good, but many international residents will wonder what they need to do now to ensure they actually get it when the time comes.

You can choose to start taking your Swedish pension at any time after the age of 63, and this is set to rise further over the next few years. You can draw 25, 50, 75, or 100 percent of your pension each month, so if you choose to continue working but reduce your hours, for example, you might opt to take out a smaller amount.

Those who retire outside Sweden, or leave the country long before retirement, are still entitled to any pension earned while working in Sweden (apart from the guarantee pension, as mentioned above). You do not have to have Swedish citizenship in order to claim it, but you do have to actively apply for the pension. This is because it’s up to you when you start receiving it.

When you leave Sweden, contact the Swedish Pensions Agency to inform them of your new address so that you will continue to receive statements and notifications. Make sure to keep them updated each time you change address.

If you retire in the EU/EEA, or another country with which Sweden has a pension agreement, you just need to apply to the pension authority in your country of residence in order to start drawing your Swedish pension. If you live in a different country, you should contact the Swedish Pensions Agency for advice on accessing your pension, which is done by filling out a form (look for the form called Ansök om allmän pension – om du är bosatt utanför Sverige).

The agency recommends beginning the application process at least three months before you plan to take the pension, and ideally six months beforehand if you live abroad. It’s possible to have the pension paid into either a Swedish bank account or an account outside Sweden.

Once you start withdrawing the Swedish pension abroad, you may also be sent a life certificate (levnadsintyg) each year. These are sent to pensioners in countries from which Sweden’s Pensions Agency and Social Insurance Agency don’t receive information automatically, to confirm that the recipient is still alive.

Life certificates are sent out to those receiving Swedish pensions each summer, and can also be downloaded from the Pensions Agency’s website. They must then be approved by an authority such as local police, social insurance, or Swedish embassy, and returned to the Pensions Agency by post or e-mail.

In summary, here’s your checklist to make sure you’re on track for a healthy Swedish pension:

  • Get online to check how much you’ve accumulated so far
  • Speak to your employer about your occupational pension, and find out if there are any decisions you can make relating to it
  • If you’re self-employed or don’t have an occupational pension, consider setting up private savings to compensate
  • Decide if you want to change the funds your premium pension and (if applicable) occupational pension are invested in
  • Think about whether you want to set up additional private pension savings
  • Keep the Swedish Pensions Agency informed about your address if you leave the country
  • Get in touch with the Swedish Pensions Agency (or, in the EU/EEA, your local pensions authority) six months before you hope to draw the pension

Member comments

  5. Very good article… hopefully you will publish more guides of this sort… for example how to manage housing contracts (it might be there already… but it would be good if there is a page menu focused specifically on guides and FAQs)

  8. Great information!!
    My husband and where always wandering what could we do about pension.
    This article explains a lot.
    Thank you!

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For members

WORKING IN SWEDEN

Half of those blocked by Sweden’s work permit salary threshold will be graduates

A new analysis by the Confederation of Swedish Enterprise has found that 51 percent of the labour migrants likely to be blocked by a new higher salary threshold will be graduates. Karin Johansson, the organisation's Deputy Director General, told The Local how this will hurt businesses.

Published: 22 April 2024 14:21 CEST
Half of those blocked by Sweden's work permit salary threshold will be graduates

When Migration Minister Maria Malmer Stenergard received the results of a government inquiry into setting the median salary as the threshold for new work permits, she said that highly qualified foreign workers would not be affected. 

“This is an important step in our work to tighten requirements for low-qualified labour migrants and at the same time to liberalise and improve the rules for highly qualified labour migration,” she said. “Sweden should be an attractive country for highly qualified workers.” 

But according to the confederation’s new analysis, published last week, graduates will in fact make up the majority of those blocked from coming to Sweden, if the government increases the minimum salary to be eligible for a work permit to 34,200 kronor a month from the 27,400 kronor a month threshold which came into force last November. 

“The politicians’ argument does not hold up,” Johansson told The Local. “More than 50 percent of those who have this kind of salary are skilled workers with a graduate background. These are the people that that the government has said that they really want to have in Sweden. So we are a little bit surprised that they are still going to implement this higher salary threshold.” 

Of those earning between 80 percent of the median salary (27,360 kronor) and the median salary (34,200 kronor), the study found that 30 percent were working in jobs that required “extended, university-level competence”, and a further 21 percent in jobs requiring “university-level education or higher”. 

“They are technicians and engineers, and many of the others are also really skilled workers that are hard to find on the Swedish labour market at the moment,” Johansson said. 

The proposals made by inquiry were put out for consultation in February, with the Confederation of Swedish Enterprise planning to submit its response later this week. 

Johansson said that further raising the threshold risked exacerbating the serious labour shortage already suffered by Swedish companies. 

"In our recruitment survey, we have discovered that 30 percent of all planned hires never get made because companies cannot find the right people," she said. "Many companies are simply having to say 'no' to businesses. They can't expand. So, of course, it will have an impact on the Swedish economy if they now increase the salary threshold. We know that there will be fewer people coming from abroad to work in Sweden." 

Johansson said she had little faith in the exemption system proposed by the inquiry, under which the the Swedish Public Employment Service will draw up a list of proposed job descriptions or professions to be exempted, with the Migration Agency then vetting the list before sending it on to the government for a final decision. 

"The decision of who will be exempted will be in some way a political one, and in our experience, it's the companies that know best what kind of people they need," she said. "So we are not in favour of that kind of solution. But, of course, it's better than nothing." 

She said that companies were already starting to lobby politicians to ensure that the skills and professions they need to source internationally will be on the list of exemptions, a lobbying effort she predicted would get only more intense if and when the new higher salary requirement comes into force next June.  

"If you have a regulation, not every company can have an exemption. You need to say 'no' sometimes, and that will be hard for companies to accept," she predicted. "And then they will lobby against the government, so it will be messy. Certainly, it will be messy." 

Although there are as yet no statistics showing the impact of raising the minimum salary for a work permit to 80 percent of the median salary last November, Johansson said that her members were already reporting that some of their foreign employees were not having their work permits renewed. 

"What we are hearing is that many of the contracts companies have with labour from third countries have not been prolonged and the workers have left," she said. 

Rather than hiring replacements in Sweden, as the government has hoped, many companies were instead reducing the scale of their operations, she said. 

"The final solution is to say 'no' to business and many companies are doing that," she said. "If you take restaurants, for example, you might have noticed that many have shortened their opening hours, they have changed the menus so it's easier with fewer people in the kitchen. And also shops, the service sector, they have fewer staff."

To give a specific example, she said that Woolpower, a company based in Östersund that makes thermal underwear, supplying the Swedish Armed Forces, had been struggling to recruit internationally. 

"They have seamstresses from more than 20 different countries and it's more or less impossible to find a seamstress in Sweden today," she said. "It's really hard for them to manage the situation at the moment and they are a huge supplier to Swedish defence." 

She said that the new restrictions on hiring internationally were also forcing existing employees and also company owners to work harder.  

"Current employees need to work longer hours than they have done and if you're a small business, you, as an owner, will work more than you have done before," she said. 

The best solution, she said, would be to abolish the salary thresholds and return to Sweden's former work permit system, which required that international hires receive the salary and other benefits required under collective bargaining agreements with unions. 

But she said that the government's reliance on the support of the Sweden Democrats party, enshrined in the Tidö Agreement, meant this was unlikely to happen. 

"This is the result of the Tidö Agreement, and you if you take away one single piece of this agreement, I think maybe everything will fall apart. So I think it's hard. When we discuss this with the different parties, they all agree that they want to push ahead with it. But it's the Sweden Democrats who put this on the table when they made their agreement." 

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