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‘Working abroad could affect your pension’

As Swedes are about to receive their yearly public pension prediction in the post, the authorities note there are ways to calculate pensions even if you have spent part of your career working abroad.

Published: 4 February 2013 17:05 CET
'Working abroad could affect your pension'

On February 11th, the Swedish Pensions Agency (Pensionsmyndigheten) will send out the “Orange Envelope” to about 5.5 million Swedes. It contains a prognosis of how much the person will receive from the national public pension scheme (allmänna pensionen) after retirement.

If a person who has worked internationally plans to retire in Sweden, there are ways to make sure payouts from pension schemes abroad are sent here.

“If you apply for your pension in Sweden, make a note in the paperwork that you’ve worked abroad and we’ll make inquiries for you,” Pensions Agency spokesman Olle Sylvén told The Local.

“If you’ve worked in other EU countries it is likely you’ve made contributions to a national pension scheme, although how much it amounts to is difficult to know.”

“However, you must personally make enquiries about any service pension (tjänstepensionen) you signed up with through your employer abroad,” he added.

Sylvén strongly urged anyone working outside Sweden to make sure such pension benefits were part of their contract, as it could impact significantly on the size of the payments later in life.

In Sweden, about nine out of ten employees have access not only to the public pension scheme, but to a service or occupational pension, he noted.

“You will definitely be better off if you negotiate with your employer abroad to include access to a pension scheme through your work,” Sylvén said.

Personal finance expert Ylva Yngveson at the Swedbank band said it can be difficult to predict how working abroad affects a person’s final pension.

“How much you’ll end up getting is a very individual question, but the question of multiple pension schemes is relevant to a lot of people,” Yngvesson told The Local.

“Every year that you are not earning in Sweden will create a loss both in the public pension and any service pension.

She urged residents of Sweden nearing retirement to study the rules and to make sure the pension authorities are aware of the time spent working abroad, which allows them to request the money.

“The request can take a bit of time to process, up to six months,” she noted.

”And you cannot merge two pension schemes into one, you’ll have two payments, but many people who’ve worked their entire lives in Sweden will also have multiple payments from different schemes.”

In December 2012, Statistics Sweden (Statistiska centralbyrån) warned that immigrants to Sweden who moved here later in life risked low pensions in their old age.

“Income levels differ sharply, depending on when in life one immigrated to Sweden,” the report into the wellbeing of pension-age immigrants noted.

Immigrants account for 12 percent of the over 65s living in Sweden.

“Those who immigrated at older ages have considerably lower pensions than other groups,” the summary stated.

Pensions Agency spokesman Olle Sylvén urged people to enter all the details of their service and private pension schemes on minpension.se to get an overview of how much money they can expect per month once they retire.

“In some cases you might decided you have to work for a bit longer,” Sylvén said.

Ann Törnkvist

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MONEY

How to protect your Swedish savings when the stock market tumbles

Recent stock market developments have made consumers in Sweden worried about the savings they have invested in the market.

Published: 5 August 2024 14:44 CEST
How to protect your Swedish savings when the stock market tumbles

Stock market volatility can be unsettling, especially when it hits close to home.

On Monday, the Stockholm stock exchange mirrored global market turmoil, with the OMXS index dropping 4.8 percent in morning trading. By 11 am, there was a slight recovery, but the index remained 2.6 percent down.

READ MORE: Stockholm stock exchange opens in the red amid global market jitters

Big names in Swedish industry weren’t spared: Boliden, a major mining company, dropped 3 percent, defence giant Saab fell 1.5 percent, and engineering firm Sandvik declined by 2.6 percent. In the banking sector, SEB took a 2.4 percent hit, while Swedbank dropped 3.6 percent.

This turbulence in the Swedish market came after significant drops in Japan’s Nikkei 225 index, which experienced its most significant one-day fall since the 1987 Black Monday Crash, and similar declines in markets across South Korea, Frankfurt, London, and anticipated losses on Wall Street.

In these uncertain times, many Swedish consumers with money invested in the market wonder whether they should do something to safeguard their savings.

Avoid impulsive decisions, expert warns

Stock market volatility can raise concerns about the safety of your savings, but according to SEB household economist Américo Fernández, there’s no need to panic.

“Should they be worried? I mean, no. I would say that this is how the stock market works: there’s a lot of uncertainty and risk connected,” he told The Local. 

“When you have savings on the global stock exchanges, this will happen, especially when we’ve had at least six months of really, really good returns – maybe even too good. Then, this is a little bit expected.

“But of course, it’s always dramatic when we have such developments in the stock market in just one or two days.”

Slow and steady wins the (investment) race

For those wondering how to protect themselves against such crashes, Fernández emphasised a consistent and steady approach to investing.

“The most common thing, the best strategy for the broad masses, is to save on a monthly basis. And this is what many Swedes do; our surveys show that 9 out of 10 Swedes save on the stock market every month. This is precisely what you should do: invest in a mutual fund, which is quite common in Sweden,” he said.

“In circumstances such as these, you buy more at a lower price, instead of timing the stock market, which is almost impossible, continue your monthly investments through mutual funds. That’s a good way of diversifying your portfolio.”

READ ALSO: Will the krona’s decline stop Riksbank from cutting rates?

Ignore the alarmist headlines

The SEB household economist also advised against reacting hastily to alarming headlines.

“Another thing that households should be aware of is that when you see alarming headlines, you should sit and calmly ride the wave out.

“It’s understandable that a lot of people are affected by herd mentality when we have these negative headlines. Everyone, but especially households with tiny savings, acts and sells, and then they buy again when the headlines are positive, when the stock exchange is at high levels…

“That is the opposite of what you should do. Try to neglect these things and be cool in these circumstances, even though it seems bad and hurts your wallet. However, if it hurts your wallet too much, that might be a signal that you have too much money in the stock market (laughs), which can be common for younger investors. Although they have had it pretty good recently,” he noted.

This advice is not only applicable to Sweden but also relevant across Scandinavia, according to Fernández.

“I think it’s applicable. Across Scandinavia, all Nordic countries save a lot of money on the stock exchange, partially because the pension system isn’t fully funded by the government,” he said.

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