For many, working life is a long journey towards retirement. For others, work is of greater importance and this contributes to many becoming job seekers.
Whatever you identify with, an important part before your future retirement life is also to keep track of pension payments and what applies to you in particular.
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You should think about that before you retire
In Sweden, nine out of ten employees have an occupational pension, that is, the part of the pension that your employer pays. In addition, it is not unusual to save for retirement on your own in a private pension savings account.
As retirement approaches, however, there are some important things you should keep in mind. Firstly, you must always apply to have the general pension part paid out, usually three months before you wish to receive your first payment.
In addition, it is also of great importance to think about how much of the pension you wish to withdraw: the whole, half, three quarters or a quarter.
In addition to this, you also need to review the withdrawal of the pension if you choose to continue working and become a so-called job holder, who withdraws both salary and pension. It can affect your future income tax return.
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Photo: Janerik Henriksson/TTV Important detail: You mustn’t miss it before retirement
During your active working life, different pension payments are made from different sources. A common scenario is that your occupational pension is paid by different employers over the years, assuming you have had several employers offering occupational pensions.
Dan Adolphson Björck works as a pension economist at minPension. In an interview with News24 he explains a very important pension detail that you should know, so that you don’t miss out on money later in life – namely free letters.
In a free letter, the occupational pension is added when you change jobs.
– What has already been paid in remains, but no new payments are made. And in the new employment, a new occupational pension is signed into which the payments go. This is a large part of the explanation for why you have several different occupational pensions after a long working life, he says.
In the event that you have defined benefit occupational pensions, i.e. the pension has been determined in advance at a percentage of your salary, it is governed by both the salary and also how long you have been employed.
– Defined contribution occupational pensions in free letters depend on how much has been paid in and what return you get on the pension capital. Many also have a private pension in free letters that they stopped paying into when the general right to deduct for private pension savings disappeared in 2016, explains Adolphson Björck and adds:
– Here, many have diverted their monthly savings to investment savings accounts and capital insurance or amortization of mortgages. But the private pension that you have saved up since before is in a free letter.
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Dan Adolphson Björck works as a pension economist at minPension. Photo: Press image minPension/Urban Jörén The pension economist: There are pros and cons
There are several advantages for pensioners who have all or part of their pension distributed in free certificates.
– The advantage of having several pensions in free letters is that you get flexibility when paying out. Greater opportunities are given to make detailed choices for when and how the various parts are to be paid out.
On the other hand, there are also certain disadvantages, says Adolphson Björck.
One of them is that it can often be complicated to deal with free letters as there is a risk that the small amounts of the withholding may fall into oblivion during the active working life.
– For some parts of the occupational pension, there is no automatic payment, it is the application that applies. In most cases, it is corrected within a few months, but sometimes it can take a year or two before you discover that you have a small part of the pension that has not yet been paid out, he explains.
One of the most important parts that everyone should be aware of is the fact that free letters have fixed annual fees that can have a big impact on the total capital, especially if it is a relatively small holding, concludes Dan Adolphson Björck by telling Nyheter24.
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