Occupational Pension Scheme for Private Sector Manual Workers
Avtalspension, SAF-LO
Coverage
Mandatory insurance
- Manual workers, from the age of 25 to 65, in the private sector working for an employer bound by collective agreement.
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.
Exempted
- There is no insurance after the age of 65 if not agreed upon otherwise.
Financing
General finances
- Fully funded personal pension plans based on premium payments and capital revenues.
Mandatory contribution payments
- 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.
- No payments of premiums are made after the age of 65.
Voluntary contribution payments
- Some sectors provide complementary pension premiums for part-time pension or extra savings.
- In addition, it is possible for employees to change part of the gross salary to pension savings and thus top up the premiums paid mandatorily to the insurance. Wage taxes on pension deposits are lower than ordinary wage tax on salaries (employer contributions).
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.
Administration
- The insurance is administered by Fora, a company owned by the social partners.
- Pension capital is managed by a company of the insuree’s own choice. If no choice is made, pension capital is by default managed as traditional pension insurance by an insurance company owned by the social partners.
- The insured person can opt for investing premium payments directly into a fund through a variety of banks and fund managers.
Qualifying Conditions
- The default age for drawing the pension benefit is 65, earlier or later payment is possible; there is no legally defined pension age.
- Part-time payment of the accumulated capital is possible if there is an actual decrease in working time.
Benefits
Pension benefits
- Primarily a defined contribution scheme based on the amount of contributory earnings, length of contribution period and capital revenues.
- By default, the accumulated pension capital is paid as a life-long annuity.
- If no investment choice is made payments will be made with a minimum guarantee.
- If an option has been made to invest in a fund no guarantee is available. Payments are then solely dependent on the value of the accumulated capital.
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.
Coverage
Financing
Administration
Qualifying Conditions
Benefits
Mandatory insurance
- Manual workers, from the age of 25 to 65, in the private sector working for an employer bound by collective agreement.
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.
Exempted
- There is no insurance after the age of 65 if not agreed upon otherwise.
General finances
- Fully funded personal pension plans based on premium payments and capital revenues.
Mandatory contribution payments
- 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.
- No payments of premiums are made after the age of 65.
Voluntary contribution payments
- Some sectors provide complementary pension premiums for part-time pension or extra savings.
- In addition, it is possible for employees to change part of the gross salary to pension savings and thus top up the premiums paid mandatorily to the insurance. Wage taxes on pension deposits are lower than ordinary wage tax on salaries (employer contributions).
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.
- The insurance is administered by Fora, a company owned by the social partners.
- Pension capital is managed by a company of the insuree’s own choice. If no choice is made, pension capital is by default managed as traditional pension insurance by an insurance company owned by the social partners.
- The insured person can opt for investing premium payments directly into a fund through a variety of banks and fund managers.
- The default age for drawing the pension benefit is 65, earlier or later payment is possible; there is no legally defined pension age.
- Part-time payment of the accumulated capital is possible if there is an actual decrease in working time.
Pension benefits
- Primarily a defined contribution scheme based on the amount of contributory earnings, length of contribution period and capital revenues.
- By default, the accumulated pension capital is paid as a life-long annuity.
- If no investment choice is made payments will be made with a minimum guarantee.
- If an option has been made to invest in a fund no guarantee is available. Payments are then solely dependent on the value of the accumulated capital.
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.
Legal Basis: Collective agreement (kollektivavtal).