Pension Administration
The Swedish pension system has undergone a significant reform that fully entered into force in 2003. The pension system is based on the lifetime earning principle, which means that the value of all paid contributions is equivalent to what a person receives in pension. The Swedish pension system has three layers, represented as follows:
General pension
The general pension contribution is paid both by the employer through the payment of social tax (10,21% of the gross wage) and by the employee through the payment of withholding tax (7% of the gross wage).
Service pension
Employers of white collar workers pay an additional pension contribution to an insurance company chosen by the employee. The pension system for white collar workers is called ITP and stands for Industrins och handelns tilläggspension or “supplementary pension for salaried employees in industry and commerce”. The purpose of this additional pension is to complete the general pension with insurance for sickness, old-age pension and survivor pension. Employers affiliated to a labor union and employers who have entered into a collective bargaining agreement are, as a rule, under the obligation to subscribe for an ITP solution for their employees.
The ITP system is divided in two sub-systems called ITP 1 and ITP 2. ITP 1 applies generally to employees born in 1979 and after. ITP 2 applies generally to employees born in 1978 and before. The minimum pension premiums under an ITP plan is 4,5% of the gross salary of the employee.
Employers wishing to hire non EU-EEA citizens must offer similar or better work conditions than the ones prescribed by the applicable collective bargaining agreement, which includes in most cases the obligation to subscribe to an ITP solution or its equivalent.
The ITP system is divided in two sub-systems called ITP 1 and ITP 2. ITP 1 applies generally to employees born in 1979 and after. ITP 2 applies generally to employees born in 1978 and before. The minimum pension premiums under an ITP plan is 4,5% of the gross salary of the employee.
Employers wishing to hire non EU-EEA citizens must offer similar or better work conditions than the ones prescribed by the applicable collective bargaining agreement, which includes in most cases the obligation to subscribe to an ITP solution or its equivalent.
Private pension
Employees in Sweden usually subscribe to a third pension insurance on their own.
Aurenav can help determine the most suitable pension plan for yourself or your employees and assist in setting-up a pension plan with our partner.
We also provide our best advice on the following questions:
• Should you keep paying your pension premiums in your home country?
• How to move pension benefits from one country to another within the EU/EEA area?
• What are the tax implications of a pension plan?
Aurenav can help determine the most suitable pension plan for yourself or your employees and assist in setting-up a pension plan with our partner.
We also provide our best advice on the following questions:
• Should you keep paying your pension premiums in your home country?
• How to move pension benefits from one country to another within the EU/EEA area?
• What are the tax implications of a pension plan?