The Swedish national pension (Allmän pension): the national pension system consists of income pension, premium pension and guarantee pension. The national pension system is a part of the public sector and is decided by politicians. The national pension system is mandatory and can not be opted out.
Alternative retirement age (Alternativ pensionsålder): the age at which you must work at least to receive the same monthly pension as previous generations with a shorter life expectancy. Calculations from the Swedish Pensions Agency.
Defined contribution system (Avgiftsbestämt system): In a defined contribution system, a certain part of your salary (your pensionable income) goes to your pension. The pension is then determined by paid contributions (including compound interest) divided by the expected remaining life. In a defined contribution system, your pension thus depends on how much you paid in.
Child year (Barnår): for each child your account is credited with an amount which then gives a pension. There are three different methods for calculating the amount and the method that gives the highest amount will be credited to your account. The Swedish Pensions Agency does this. For each child you can get a maximum of 4 years and the amount is independent of whether you work or not.
Housing supplement (Bostadstillägg): a supplement for those with a low pension payout. To receive a housing supplement, you must live in Sweden and be 65 years or older. You must apply for housing supplement and it is tested against pension and other income and assets. The supplement is tax-free.
Residence-based benefits (Bosättningsbaserade förmåner) : some benefits are residence-based, ie you must live in Sweden to receive these. This applies to e.g. the guarantee pension, the financial support for the elderyly and housing supplement.
Fund-based system (Fonderat system): money is deposited in funds or in other assets to earn a return. Money is paid in individually. The premium pension and private pension insurance are examples of fund-based systems.
Pay-as-you-go system (Fördelningssystem): payments from those who work today are used for payments to those who are now retired. It is a social contract between generations based on trust, as today's workers expect future workers to do the same.
Defined benefit scheme (Förmånsbestämt system): the pension is determined as a certain percentage of the final salary, or a certain percentage of the average of the last x years, or as a certain amount. The size of the pension does not depend on how much you pay in, but instead on your salary at a certain time.
Life expectancy (Förväntad livslängd): how long a person is expected to live. It is based on a statistical calculation for an entire cohort / year of birth.
Guarantee pension (Garantipension): Individuals with a low own pension (income pension and premium pension) can receive a guarantee pension. Guarantee pension can only be obtained from the age of 65 and it is residence-based. A full guarantee pension requires 40 years of residence in the EU / EEA, with fewer years the pension is reduced but 1/40 for each missing year. The guarantee pension is defined benefit and is adjusted for inflation.
Individual accounts (Individuella konton): there are individual accounts in both the income pension and the premium pension, where all payments and interest-on-interest are booked. In the income pension, the interest rate is determined by wage development and in premium pensions by the return on selected funds.
Income pension (Inkomstpension): a part of the national pension system that depends on your salary. The income pension is a defined contribution system, where the employer pays 16% of the salary to the individual account. For benefits from social insurance, childhood, etc. the state pays the fee. In the income pension, the account is fictitious, because the system is a pay-as-you-go system. The pension is determined by the amount in the account divided by the remaining life expectancy. The outgoing pension is written up with wage growth minus 1.6%.
Cohort (Kohort): a year of birth, e.g. all born in 1945 or 1980.
Retirement age (Pensionsålder): the age at which you take out your pension. In the national pension, you can take out a pension from the age of 62 at the earliest, no upper limit. Guarantee pension can only be obtained at the age of 65.
Premium pension (Premiepension): part of the national pension. Premium pension is defined contribution, so it depends on how much has been paid in. The employer pays in 2.5% of the salary and the money is invested in the capital market in fund(s) selected by the individual.
Social insurance systems (Socialförsäkringar): politically determined insurance as protection against certain risks. In Sweden, social insurance includes parental insurance, sickness benefits, sickness and activity compensation (i.e. disability pension), and unemployment benefits.
Occupational pension (Tjänstepension, also called avtalspension): agreement between the social partners - employers 'and employees' organizations. If there is a collective agreement at your workplace, it is mandatory.
Financial support for the elderly (Äldreförsörjningsstöd): for those who are not entitled to a guarantee pension or only a low one. It is residence-based. Must provide a reasonable standard of living, be deducted from other income and you must make a new application every year.