The Swedish pension system has taken many different forms over the years. For some, it can even be perceived as a tricky jungle to get a handle on all the parts within the system, before it is time to retire yourself.
It was the baron and the social politician Gustaf Adolf Raab which in 1906 raised the issue of establishing a national pension institution in Sweden whereby all men and women were obliged to pay a pension contribution in order to be able to receive a pension payment after working life. The idea was that the fee would function as a deposit that would be repaid on an ongoing basis after the end of working life.
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Over the years, the pension system was refined and in 1936 the first reform was carried out where a basic pension was introduced.
In 1946, a national pension was introduced, which resulted in everyone who reached the age of 67 receiving SEK 1,000 annually in pension.
The pension system we know today saw the light of day in the mid-1980s, was then refined and in 1994 the proposal was made to reform and introduce an old-age pension system.
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This is how much you earn for retirement
On 1 January 2010, the Pensions Authority was established, whose work consists of communicating and informing about all parts of the pension system. In addition, the authority is responsible for paying out part of the pension – namely the general pension.
During your working life, you now earn money for your public pension. The contributions paid to the pension are called pension rights where the total pension right is 18.5 percent of your pensionable income.
Photo: Pontus Lundahl/TT
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Three contributions are paid into your pension
But why do we pay a fee in the pension system today?
The pension rights registered in your pension accounts are financed through three different fees: general pension fee, employer fee and state old age pension fee.
Of these three fees, you only pay into the public pension yourself. This is done automatically via the tax deducted from your income each month. The pension contribution corresponds to seven percent of the salary. Income from social and unemployment insurance are exempt.
“Every year that you work and pay tax, you earn for your public pension through the pension contribution that is paid in. You also earn for your pension when you are on parental leave, study, do compulsory service, have unemployment compensation or sickness or activity compensation,” writes The pension authority about the general pension contribution on its homepage.
The employer’s contribution is paid by your workplace and corresponds to 10.21 percent of each employee’s salary.
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Every year, the Swedish Pensions Agency sends out the orange envelope, where you get information about your earned pension. Photo: Janerik Henriksson/TT
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Then a salary of SEK 614,500 is required
However, there are certain requirements in the Swedish pension system that are important to know. Namely, you have to reach a specific amount each year to earn pension rights for your public pension.
The Swedish Pensions Authority explains that you as a worker must have an annual income of at least SEK 24,238, calculated in 2024, to start earning for your public pension. In addition, there is a ceiling you can reach for earnings for the pension.
“To reach that, you need to have an income of SEK 614,500 per year (2024). This corresponds to SEK 51,208 per month (2024),” they write.
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Photo: Fredrik Sandberg/TT This is how much you pay in pension contributions each month
The state old-age pension contribution is paid by the state if you have pensionable allowances from social and unemployment insurance, i.e. if you are on sick leave, unemployed or similar. That fee also corresponds to 10.21 percent of the income.
This is how much you pay in general pension contribution:
In summary, you can think that what you yourself earn for your public pension is done via the fee you pay, via tax that is deducted from the income, and is called pension right.
The total pension entitlement is 18.5 percent of your pensionable income.
However, it is the case that various events in life also affect the pension. You receive some compensation from the state if you have lost income when, for example, you are on parental leave, studying or have been unemployed.
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