Swedish pensioners that retired at the age of 65 in 2020 had a pension compensation rate of, on average, between 75-86 per cent of their income in the years prior to retirement, according to the Swedish Pensions Agency.

The compensation rate is the percentage of income in retirement in relation to income earned in the years immediately before retirement. The agency said that the figures are for various income groups. This figure has marginally increased since 2014 when the average was 72-81 per cent.

This is revealed in the report, Compensation rates for new pensioners, which is the Swedish Pensions Agency's response to the government assignment to produce living income profiles for different income groups and their compensation rates.

“The reduction in income that generally occurs when you go from being an employee to being a pensioner is for large groups between 25 and 14 per cent,” Swedish Pensions Agency analyst, Kristin Kirs, said.

The report describes average outcomes for individuals who during the period 2014 to 2020 turned 65 and then took out their pension, i.e. people born 1949-1955. The agency stated that the figure is high because income from work in the years before retirement generally worsens compared to the rest of a person’s working life.

For newly retired middle-income pensioners, the general pension was between 53 and 59 per cent of the salary in the years before retirement. For people with low income, the general pension has been between 62 and 71 per cent of the final salary and for people with high income between 38 and 42 per cent.

“The general pension's low compensation rate for high-income earners is due to the fact that only income up to the equivalent of SEK 532,500 per year is insured. The higher incomes are instead insured through occupational pension agreements, which are estimated to cover just over nine out of 10 employees,” Kirs said.

Share Story: