It’s never a bad time to think about planning for retirement, and keeping yourself updated on the pension laws is a good place to start. In the Nordics, pension laws are quite flexible and give you a number of options depending on the career you want and for how long you wish to be employed.
From regulation changes in Norway and types of pensions in Denmark, to supplementary pensions in Finland and the two types of ITP in Sweden; here are some things to keep in mind as you plan for the future.
Norway
You can withdraw money from your pension one month after turning 62, and until 75, and you are free to combine work and pension without your pension being reduced in any way.
The only prerequisite for withdrawing pension before 67 is that you must have sufficient earnings. The condition for withdrawal is that the pension you will receive when you turn 67 must at least correspond to the minimum pension level. The longer you wait before taking out a retirement pension, the higher the pension.
After the 1st of January 2022, the parliament is enacting some regulation changes you might want to keep in mind.
- The qualification period needed to qualify for withdrawing money from the national insurance has been raised from 3 to 5 years. This is the period you have to work and/or live in Norway in order to qualify for a pension from the state of Norway.
- Special rights to be entitled to a benefit and favorable calculation rules for refugees are abolished.
- For AFP (avtalefestet pensjon/contractual pension) in the public sector, the amendment only applies to the repeal of the rules on more favorable calculation for refugees.
- Supplementary benefits are introduced for disabled refugees.
- Old-age pensioners who have reached the age of 67 and who support a spouse and / or children under the age of 18 can receive a means-tested maintenance supplement.
These regulations will be enacted for any application sent after the 1st of January 2022, and will not be enacted for any application sent before this time.
From 1 January 2022, new maintenance supplements for old-age pensions and AFP in the public sector will no longer be granted. The maintenance supplements for old-age pensions and AFP in the public sector will be phased out during 2023 and 2024. From 2025, no one will receive maintenance supplements anymore.
Denmark
The Danish pension system is divided into 3 different types: statutory pensions, labor market pensions, and the individual pensions.
The statutory pension is the one the public authorities have control over. It comes in the form of national pension, senior pension and early retirement pension. It is also ATP Lifelong pension, which almost everyone is covered by.
The individual pension is the one you create yourself through a pension company or a bank.
Labor market pensions are pensions created as part of employment.
There are 3 types of labor market pensions:
- A collective agreement-based pension. Pension is agreed through a collective agreement, applicable to a group of employees who typically have the same professional or educational affiliation, regardless of which company they are employed in.
- Company pension, agreed between an employer and a pension company. A company pension includes the employees of a specific company. The employer is therefore free to choose which pension company to administer the pension. This pension is bound by the agreements between the employer and the employees of the company on how the pension is to be put together and what it is to cover.
- Civil service pension is for civil servants and for civil servants employed in municipalities and regions. A civil service pension is linked to your employment relationship. The size of your pension depends on how long you work as a civil servant. You earn the right to the pension in proportion to the number of years you have been employed as a civil servant.
Finland
The majority of all persons with earnings-related pension insurance, approximately 60 percent, are insured under the Employees Pensions Act (TyEL). All private sector wage earners, except for sailors, are insured under this act, and each employee must have pension insurance.
The TyEL insurance contribution percentages are confirmed annually by the Ministry of Social Affairs and Health, and the percentages are the same for all employment pension companies in Finland.
The employer takes care of its employees’ pension by paying the TyEL contribution. The contribution varies depending on how large the employer is and how much discount it is given on contributions, which is a percentage of the company’s wages and salaries paid in part by both employer and employee. The employer’s contribution in 2021 is between 17,65-16,5 percent on average.
The employer can also take out supplementary pension insurance for the employees. It is considered as a tax-exempt benefit for the employee if the total amount of the supplementary pension insurance premiums don’t exceed 8.500 euros per employee during the fiscal year. The supplementary pension will be considered as taxable income of the employee if the total exceeds that amount.
Sweden
Everyone who lives or works in Sweden is entitled to a general pension, i.e. a pension that comes from the state. If you work for a company with a collective agreement or other agreement, the employer also pays a pension that is in addition to the general pension. This part of the pension is called an occupational pension and is an important part of the total pension.
Employers with collective agreements pay pension insurance for employees, so-called occupational pensions.
Collectum is an election center for privately employed salaried employees with the collectively agreed occupational pension ITP. There are two types of ITP:
- ITP 1 with defined-contribution old-age pension. Applies to salaried employees born in 1979 or later (some persons born earlier may also be covered).
- ITP 2 with defined-benefit old-age pension. Applies to salaried employees born in 1978 or earlier.
