Pension savings? Then it pays to switch salaries

It is not entirely easy to know when to switch salaries or not.

On the Pensions Authority’s website, they have clarified the issue, and come up with suggestions for when it can be good and when it can be less good.

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What does it mean to exchange salary for pension?

Whether you can switch wages or not depends on your employer.

In the case of a salary exchange, the employer allows the employee to exchange part of his salary for other benefits. It can, for example, be against an extra occupational pension.

Depending on how it looks at your workplace, the salary change can take place continuously every month or every year.

Now the Pensions Authority believes that salary switching is not suitable for everyone.

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The Swedish Pensions Agency: Then you should not change your salary

If you have a monthly salary that is lower than SEK 51,245 before tax, you should not switch salaries, according to the Pensions Agency. Then the public pension can be affected and be lower than if you earn more than SEK 51,245.

The authority reminds that the money you set aside via the salary exchange will not be as available as when you set aside money in a savings account.

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“In some occupational pension agreements, you can withdraw the occupational pension at the earliest from the age of 55, and the shortest payment period is 5 years. However, several occupational pension agreements have raised their ages for the earliest withdrawal of the occupational pension to over 60 and also the shortest time for withdrawal of the occupational pension to 10 years .”, writes the Pensions Authority.

According to the Swedish Pensions Agency, it is important to always sign an agreement with your employer before starting to exchange wages.

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On the authority’s website have listed various criteria that show who is suitable for salary change. These are as follows:

When does it pay to switch salaries?

• If you have a salary over SEK 51,245 per month (2024), before tax and after the salary change has been made.
• If you need extra pension savings.
• If you are prepared to lock in the savings.
• If you do not have too high a salary (see below).
• If you know what fees you have to pay for the savings.
• If you are not over 65 (if you continue to work after 65, you need to check how large pension payments your employer intends to make if you continue to switch salaries).