Newly retired Swedish pension savers receive an average of between 72 per cent and 110 per cent of their final salary in retirement, according to a new report from the Swedish Pensions Agency (SPA).

The SPA’s report was in response to a government assignment, and assesses compensation rates for people who turned 65 and took a full income pension and premium pension in 2021.

The compensation rate, including the occupational pension, for the median person within three income groups amounted to between 72 per cent and 110 per cent.

Low income retirees tended to have a higher compensation rates than high income retirees, with a low income woman receiving an average of 110 per cent of their final salary in retirement.

A low income man received an average of 104 per cent of their final salary.

Meanwhile, a higher earning men and women received an average of 79 per cent and 73 per cent of salary in retirement, respectively.

For average income men and women, the average compensation rate was 84 per cent and 78 per cent, respectively.

When just taking the general pension into account, low income Swedes receive an average of 87-88 per cent of final salary, compared to 38-39 per cent for high income retirees.

The SPA noted that the low compensation rate for high income retirees through the general pension was because only incomes up to SEK 599,250 a year were insured.

Higher earners are instead insured through occupational pension agreements, which were estimated to cover around nine in 10 wage earners.

“The reduction in income that occurs when you go from being a wage earner to being a pensioner is for medium and high income earners on average between 28 and 16 per cent,” commented SPA analyst, Kristin Kirs.

“Low-income earners, on the other hand, receive an average increase in income upon retirement.

“The fact that the compensation rates are so high is due, among other things, to the fact that many people have a weak income trend in the years before retirement, some even go down in income, voluntarily or involuntarily. A low final salary raises compensation rates.

“Another explanation is that the occupational pension is often withdrawn for a limited time. It gives a higher occupational pension for a number of years, but which ends after the specified time.”

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