Saving for retirement is essential for anyone working in Sweden. The Swedish pension system is based on a three-pillar model, with the first pillar being the public pension system. The second and third pillars consist of occupational pension schemes and private individual pension plans.
The public pension system is mandatory for all workers in Sweden and is funded by contributions from employees, employers, and the government. The amount of pension received is based on the years worked, income, and the average life expectancy in Sweden. As of 2021, the retirement age in Sweden is 65 for both men and women, but will gradually increase to 67 by 2026.
The second pillar, also known as the occupational pension scheme, is a supplementary pension provided by employers. This is not mandatory but is a common arrangement in most companies in Sweden. The third pillar is the private individual pension plan, which is voluntary and can be obtained through various financial institutions. Contributions to these plans are tax-deductible and can be personalized to fit individual retirement goals.
In addition to the three-pillar model, Sweden also offers a flexible pension option called the “flexipension.” This allows workers to gradually reduce their working hours and receive a partial pension while still working part-time. However, this option is only available to those who have reached the age of 61.
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