This is a short introduction to the workings of pension savings through a company owned pension insurance (pensionsförsäkring).
In essence, a company owned pension insurance for an individual
- Lets you put away funds from the company to a slightly lower national insurance tax than if it was taxed as payroll. Currently 24,26% instead of 31,42%
- Locks the funds from withdrawal until you’re of a certain age.
- The income tax is not done until the funds are withdrawn.
- Generally includes insurances that will cover
- Added sick pay if you are sick for more than 3 months.
- Continued payments to your pension savings if you are sick for more than 3 months.
- Help with rehabilitation after sickness.
- If you die and you still have funds left, they will be inherited by your heirs.
The obvious pros are the insurances and lower and postponed taxation. The obvious con is that your funds are locked.
If it’s only lower taxation you’re after, you might just as well allocate the funds to dividends instead. The same amount you would put away as pension funds would then be taxed with corporate tax (20,6%) instead of national insurance tax (24,26%) and dividend tax (20%) instead of income tax (approx 25-35%).
We do advise that you always have some basic level of savings for pension to have the insurances that are included, to cover for sickness.
Financial institutions and pension funds
If there’s anything that will make a banker pay attention to you, it’s mentioning that you want to save for your pension.
The reasons for this are many, but in essence it’s about big and easy money. Everyone wants to manage your pension funds and it’s basically impossible to not earn money on managing someone’s pension with the most prevalent business model for pension funds.
Our advice is that you manage your own pension fund and use an actor that will allow you to do that. We recommend
We discourage using any other Swedish actor in the industry than the above due to the other’s business model.