Swedish pension savers have been warned that retiring before their target age could leave them with a pension income up to 15 per cent lower than if they had retired at their target age, according to Skandia.

The pension company’s report analysed people born in the 60s and the impact that retiring two years early would have on their retirement income.

For example, it found that a public sector preschool teacher born in 1965 would have 15 per cent less pension income if they retired two years early, while a private sector accountant in the same circumstances would be 14 per cent worse off.

On the other hand, the same preschool teacher retiring two years after the target age would have 15 per cent extra pension income, and the same accountant would be 16 per cent better off in retirement.

The target age in Sweden, which aims to capture the expected increase in life expectancy for each generation, is regularly decided by parliament and is set at 67 until the year 2029.

“Sixty-seven years is two years longer than the age that many still relate to as retirement age,” commented Skandia pension economist, Mattias Munter.

“The norm of retirement is still strongly linked to the age of 65. By increasing knowledge about how important the choice of retirement age is for the size of the pension, we enable more people to plan for their pension in the best way.”

A survey conducted by Novus on behalf of Skandia found that 45 per cent of Swedes want to retire between the ages of 65 and 67, while only 31 per cent were contemplating working longer.

“Our calculations show that the choice to retire early is a costly story, while those who work longer, even part-time, have large pension money to earn,” Munter continued.

“With the report, we want to provide a broader understanding of the financial consequences of different pension choices.

“By emphasising the importance of making active choices for one's occupational pension and taking responsibility for one's own savings, we can all contribute to safer and better pensions for more people.”

Share Story: