The Swedish Pensions Authority (SPA) has warned savers against withdrawing money from their public pension early.

It noted that there were companies that were advising savers to start drawing the public pension as early as possible, while continuing to work, to invest it and withdraw in retirement.

However, the SPA said it had made calculations that showed there was a high risk this strategy would not pay off and the value development was more uncertain than if people waited to start drawing their public pension.

Furthermore, Swedes pay more tax until they are 66 and there are often high fees for this type of saving outside of the public pension, the authority warned.

It also cited concerns that the early withdrawal of the national pension could impact income-related benefits, such as widow’s pension, unemployment benefit and housing allowance.

Starting to withdraw the public pension to invest the money would mean starting to withdraw from the age of 62 at the earliest and invest it in an endowment insurance or other form of savings.

“There are advantages and disadvantages to withdrawing your pension early and investing the money while continuing to work, but for most people it is not worth it,” said SPA market analyst, Ann-Christine Meyerhöffer.

“There is a risk that the value development is not high enough and a risk that there will be a lower pension overall. If you are advised to withdraw the national pension and invest it, you should be critical. It usually pays off for the companies that sell you this but not for you.

“Many fail to find out what happens, for example, in the event of a bad development on the stock exchange and which different fees must be paid.

“For those who choose time-limited withdrawals, you should keep track of what the pension looks like after the invested money has been withdrawn.”

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