Occupational Pension Scheme for Industry and Trade

Mandatory insurance

• White-collar workers in the private sector from the age of 25.
• ITP consists of different pension plans: ITP 1 for white-collar workers in the private sector born in 1979 or later; ITP 2 for white-collar workers in the private sector born in 1978 or earlier; ITPK is a supplement for ITP 2 for white-collar workers in the private sector born in 1978 or earlier.

Opting in

• Employers not bound by general collective agreement can choose to directly sign an agreement with a trade union and get access to the occupational pension scheme for their employees.
• Self-employed persons in the relevant sector.

General finances

• ITP 1 is a fully funded personal pension plan based on contribution payments and capital revenues.
• ITP 2 is a defined benefit pension scheme financed by premiums to an insurance company (Alecta) or the employer in combination with buying credit insurance with a mutual insurance company; reserves funds on the balance sheet or transfers funds to a pension trust.

Mandatory contribution payments

ITP 1

• Employer pays 4.5% of salary not exceeding 7.5 times the ‘income base amount’ yearly (SEK 501,000), and 30% on gross salary above this level.

ITP 2 & ITPK

• Financed or secured by the employer.
• Can be complemented with ITPK, a defined contribution premium reserve plan where the employer contributes an additional 2% of the gross salary.
• If a flex solution is applicable, the employer pays an additional premium of 0.7% both for ITP 2 and ITPK.

Voluntary contribution payments

• In addition, it is possible for employees to change part of the gross salary into pension savings and thus top up the premiums
• paid mandatorily by the employer to the insurance.

Taxation of contribution payments

• Contribution payments, reservation on the balance sheet and transactions to a pension fund are subject to a specific wage tax of 24.26%.
• Wage taxes on pension deposits are lower than ordinary wage taxes on salaries (employer contribution is 31.42%); therefore, pension premiums can be increased by this difference (5.8%) without this constituting an extra cost for the employer.  

• ITP 1 is administered by Collectum, a company owned by the social partners.
• ITP 2 is administered by Alecta, a mutual insurance company.

• ITP can be drawn from the age of 55 but cannot be combined with work.
• A full pension from ITP 2 requires 30 years of insurance (360 months).

Pension payments

ITP 1

• Benefit is normally a life-long annuity paid out monthly but can be paid as a fixed-period annuity (minimum 5 years).
• Benefit is primarily based on the amount of contributory earnings, length of contribution period and capital revenues.

ITP 2 & ITPK

• ITP 2 is a defined benefit plan.
• Benefit is normally a life-long annuity paid out monthly but can be paid as a fixed-period annuity (minimum 5 years).
• Benefit is paid in relation to the number of insurance years and as a share of the final salary, 10% up to a ceiling of 7.5 times the ‘income base amount’ yearly, 65% of the salary between 7.5 and 20 ‘income base amounts’, 32.5% of the salary between 20 and 30 times the ‘income base amount’.
• ITPK is primarily based on the amount of contributory earnings, length of contribution period and capital revenues.

Taxation and social security contributions

• Pension benefits are subject to income tax.
• Pension benefits are not subject to social security contributions.
• There is a standard tax on the yearly return on capital: approximately 0.5% of the pension capital is taxed with 15%, paid by the trustee.