Salary exchange – what employers need to know

One way for employers to reward their employees is through salary exchange, where an employee gives up part of their salary in return for a benefit. This could for example involve private health insurance, a company car, a bicycle or other equipment. One of the most common and often most advantageous forms of salary exchange, however, is that which is paid into a pension.

Salary exchange as a benefit

In its simplest form, salary exchange towards a pension is an agreement between employer and employee aimed at strengthening the employee’s occupational pension through a deduction from gross salary. The deducted salary is instead paid into an occupational pension solution. Most commonly, the employee exchanges part of their gross salary on a monthly basis, but it may also be possible to exchange bonus payments.

Who can benefit from salary exchange?

There are no formal rules governing which employees are eligible for salary exchange into pension. However, it is important to take the employee’s income level into account. In order for salary exchange to be advantageous, the employee should have a relatively high salary, as the gross salary after salary exchange should not fall below 8.07 income base amounts (approximately SEK 56,100 per month in 2026).

If the salary after exchange falls below this level, there is a risk that the state pension, sickness benefit qualifying income (SGI), parental allowance and other social insurance benefits may be reduced.

What does the employer need to consider?

Regardless of whether the employee chooses to exchange a bonus or part of their regular salary, there are several aspects for the employer to consider. Although salary exchange entails a certain amount of additional administration, it is often regarded as an attractive benefit and can provide a clear competitive advantage in the labour market.

Some of the steps an employer may need to take include:

• Reviewing and ensuring a clear negotiation process
• Identifying and engaging advisers
• Selecting insurance providers or intermediaries
• Planning and setting up a new financial flow or adapting an existing one
• Updating HR documentation, such as the employee handbook and internal guidelines
• Drawing up supplementary agreements

Supplementary agreement to the employment contract

When an employer offers salary exchange, it is important to draw up a clear supplementary agreement that clarifies the terms and conditions for both employer and employee.

The supplementary agreement should include the following information:

• Whether other insurance policies, such as premium waiver insurance, are to be included
• The size of the pension premium or contribution and the corresponding salary deduction
• When and how the salary exchange and the agreement can be terminated or adjusted
• The respective responsibilities of the parties
• Special conditions, such as what applies in the event of long-term illness, unpaid leave or parental leave
• Cost neutrality

Please also note that if the employer wishes to take advantage of special deductibility for pension premiums, a formal undertaking (a so-called utfästelse) is required.

Cost neutrality

As the pension tax is lower than employers’ social security contributions on salary, the employer may choose to increase the salary-exchanged pension premium by approximately 5.8 per cent. This way, salary exchange can be made more beneficial for the employee without increasing costs for the company. When this is done, the salary exchange is considered cost-neutral for the employer.

Reporting pensionable salary

It is important for the employer to consider the overall structure of the insurance solution. How should pensionable salary be reported, and to whom? And what options do employers have when reporting pensionable salary to the pension selection centre?

If the employee is covered by a defined-contribution pension arrangement, the employer may choose to make an additional premium contribution to compensate for the part of the old-age pension contribution that is reduced when reporting is based on gross salary after salary exchange.

In a defined-benefit pension arrangement the employer may, if permitted by the pension administrator, report both salary before and after salary exchange. In such cases, the employer normally does not need to compensate for a reduced old-age pension. The old-age pension can then be calculated on the higher salary before salary exchange, while sickness insurance and other risk insurance policies are based on the lower salary after salary exchange.

Salary exchange affects more than just employees’ pensions. For the employer, it also entails increased administration, requirements for accurate documentation and careful calculations. In addition, decisions must be made regarding who is to be responsible for managing the pension solution in order to ensure a sustainable and well-functioning salary exchange process in the long term.

At Azets, we have extensive experience of employee benefits and the regulations governing benefits packages. If you have questions or concerns about salary exchange or would like suggestions for suitable benefits packages, you are welcome to get in touch with us.