Mortgage-linked pension switching could leave Swedish savers facing losses of around SEK 167,000 over time, as higher fees erode long-term returns, the Swedish Pensions Agency (SPA) has warned.

Its report, Transfer of occupational pensions in connection with mortgage negotiations, focused on the recent boom in occupational pension transfers, which have been allowed since 2007.

It is estimated that around SEK 114bn has been transferred between pension providers up to 2025, with many savers tempted by package deals that include mortgage incentives.

However, SPA has warned that a mortgage interest rate discount may be of little benefit to consumers if it is offered at the expense of higher fees in the occupational pension scheme.

SPA highlighted that for many people, their occupational pension seems a distant prospect, while a lower mortgage rate has an immediate impact on household finances.

SPA analyst and report author, Philip Berlin Jarhamn, explained: “When faced with a choice between a short-term decision and a long-term one, there is a risk that the short-term option, with its immediate benefits, may take precedence over the long-term one.

“This can lead to costly decisions in the long term, particularly as mortgage discounts almost always cease after a year.”

The report showed that a 0.1 percentage-point reduction in mortgage rates can result in savings of around SEK 30,000 over 29 years on a SEK 2m mortgage.

At the same time, a 0.3 percentage point increase in occupational pension contributions over the same period can reduce pension capital by around SEK 167,000.

“The option to transfer one’s pension offers benefits to consumers but requires knowledge, for example, regarding the effects of compound interest.

“An individual’s decision should be based on what is best overall, rather than on a temporary offer linked to a mortgage. Small differences in fees can have significant and not always intuitive effects in the long term,” Berlin Jarhamn added.

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