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© International Group Program
Country Panel Presentation: Sweden
2016 IGP Regional EMEA Seminar Windsor, May 24-26, 2016
Pekka Jansson, Manager Multinational Pooling Michaela Bruneheim, Head of Insurance
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This presentation was exclusively prepared for the attendees of the 2016 IGP Regional EMEA Seminar. None of the contents of this presentation may be copied or disclosed to any other party or used for any other purpose than the one mentioned above without IGP's prior written permission.
© International Group Program
Key Topics
Background Information
Country and Company Info &
Background
Social Security
Private Practice
Taxation Administration Legislation
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Background Information Sweden
• Area 175,900 sq mi, the third largest country in Western Europe
• Population 9, 8 million (January 2016)
• Life expectancy Men 80,4 years, Women 84,1 years
• Export Machinery, electronics, telecommunication, paper, iron, steel, music, computer games etc.
• Unemployment 7,7% (March 2016)
• EU Member of the European Union
• Currency Swedish Krona (SEK) – 1 EURO approx. 9 SEK
• GDP per capita SEK 424,000 (EURO 47,111)
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Background Information About SPP
500 employees
SEK 153 bn Under management
700 000 individuals
17 000 companies
100%
Of AUM Sustainable invested
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Key Topics
Background Information
Social Security
Summary of Social Security
Benefits
Private Practice
Taxation Administration Legislation
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Social Security Benefits
• ”The world’s most generous general welfare system at the price of the world’s highest tax burden”
• The Swedish welfare state aims to embrace everyone
• Most Swedes seem content with what they get for the taxes they pay
• Fully tax-financed education and heavily tax-subsidized health care
• In fact, the Swedish word for tax - skatt – has another meaning: treasure. There can’t be many languages in which the word for tax has such positive connotations
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Social Security Benefits
• Compulsory, covering all residents and individuals working in Sweden
• Residence-based benefits Health care Dental care Benefits for families with children Guarantee pension Elderly care
• Employment-based benefits Sick leave payment Parental leave Unemployment payment Income pension
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Social Security Benefits
• Equal access to tax funded health care
• High cost protection, you never pay more than SEK 1,100 (EURO 122) in patient fees in a 12-month period
• Appointments for children up to age of 18 are free in most counties
Health care (residence-based)
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Social Security Benefits
• Free of charge for children until they turn 20
• Adults, high-cost protected quality care
• From checkups to braces
Dental care (residence-based)
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Social Security Benefits
• Children are high priority in the Swedish social welfare system
• A monthly tax free child allowance of SEK 1,050 (EURO 117) until the child reaches age of 16
• After age of 16, a study allowance of SEK 1,050
• Special large family supplement is paid to families with two or more children
• Additional benefits for children with disabilities or illness
• School is free and day care subsidized
Benefits for families with children (residence-based)
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Social Security Benefits
• 18 % of Sweden’s population are pensioners and more than 5 % are aged 80 or over
• A number of welfare systems ensure that older people are able to live normal, independent lives; Home meal delivery Help with cleaning and shopping Transportation service Health and social care Senior housing
Elderly care (residence-based)
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Social Security Benefits
• The Swedish system gives you the time and compensation needed to recover
• Typically 80 % of your salary
• No payment for your first sick day
• Also a preventive system in place to keep employees active and healthy
Sick leave payment (employment-based)
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Social Security Benefits
• Making it possible to have children while keeping your job
• 80 % of benefits-based income
• 480 days of paid leave per child, with 90 days being reserved for each parent
• Fathers are also entitled to 10 extra paid days of leave when the child is born
Parental leave (employment-based)
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Two kinds of pension in the system
Employer pays 10,21%
Charge 18,5 % of salary
Employee pays 7 %
Pension
Premium- pension Income-
pension
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"Tic-the-box-market"…..
• ….Employer pay…Employee choose….
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"Tic-the-box-market"….
……Employer pay….Employee choose….
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Social Security Benefits
• Employer: 31,42 % of gross earnings
• Employee: 7 % on salary up to SEK 478 551 (EURO 53 172)
• Contributions are tax deductible
Contributionss
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Key Topics
Background Information
Social Security
Private Practice
Customary Private Employee Benefits:
Type & Level of Benefits / Survey
Data / Plan Design / Benchmarking /
Trends
Taxation Administration Legislation
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• Collective agreements are predominant in Sweden
• For both salaried employees and wage earners within all lines of business
• Pension plans are part of the agreements
• Including the design of the pension plan Retirement Benefits Disability Benefits Widow’s and Orphan’s Pension Occupational Group Life Insurance (TGL) Workmans Compensation (TFA)
Employer Paid Benefits
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Private Practice
• Wage earners SAF/LO Collective Pension
• Salaried employees The ITP-Plan
• No Collective Agreement Free to Design Your Own Plan
Pension Plans in the Private Sector
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Private Practice
• Effective from 1 July 2007
• Two plans, ITP1 and ITP2
• DC / DB
ITP Agreement for Salaried Employees
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Private Practice ITP Agreement
DC 2%
Defined Benefit
Defined Contribution 4,5%
Born 1979 or later
Applies from age 25
10%
Born 1978 or earlier
Applies from age 28
65% 32,5%
Ceiling
30%
ITP1
ITP 2
EURO 49 417
EURO 49 417 EURO 131 777 EURO 197 667
DC DC
DB DB DB
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Private Practice Conversion of DB to DC
• Employees with salary above EURO 65 889 can choose to opt out of the standard ITP-plan (ITP2)
DC 2%
Defined Benefit 10% The DB premium can be converted to DC contribution
Ceiling
The risk premiums are poolable
EURO 49 417 EURO 197 667
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Private Practice
• Collectively agreed benefits in the event of death
• The occupational group life insurance, TGL, is a capital insurance, which provides survivors with a lump sum. TGL provides for a face amount, and a child supplement. TGL is paid by the employer.
• Most salaried employees and wage earners in the private sector between 18 and 70 years of age are insured. The maximum face amount, as of 2016, is SEK 265 800 (EURO 29 533)
Group Life Insurance
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Private Practice
• Full freedom to design the benefit plan
• The plan would normally include; Retirement pension Disability pension Optional Widow's and Orphan's pension Occupational group life insurance (TGL) Workman’s compensation (TFA)
• The plan is paid by the Employer
• Possible to pool all the risk premiums
No Collective Agreement
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Key Topics
Background Information
Social Security
Private Practice
Taxation
Taxation of benefits (e.g. lump
sum versus pensions) /
Tax treatment of ER and EE
contributions
Administration Legislation
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Taxation of Pensions
• ETT Excempt contributions Taxed investment income Taxed benefits
• Payroll tax Pension premiums are subject to a payroll tax of 24,26 %, paid by the
Employer
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Key Topics
Background Information
Social Security
Private Practice
Taxation Administration
Legal requirements re. administration of
benefit plans: actuarial valuations / communications / involvement of
unions/employees
Legislation
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Administration of Pension Plans
• Insured Pension Administered by the Insurance Company
• Book reserve method Administered by PRI
• Pension foundations Administered by Insurance Companies or pension consulting agencies
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Funding of Plans
• The ITP-plan Premiums to Collectum Book reserve method – With a guarantee from FPG Pension foundation – With a guarantee from FPG
• Non-collective plans Premiums to an insurance company Book reserve method – With a guarantee from FPG Pension foundation – With a guarantee from FPG
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Key Topics
Background Information
Social Security
Private Practice
Taxation Administration Legislation
Current legislative issues with
significant impact on the funding of the benefit plans / How are employer
and employees affected?
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Legislation
• Greater neutrality and standardization between the different ways that occupational pensions can be funded (i.e. insurance, book reserve, pension foundation)
• More flexibility regarding the timing and payment of pensions solutions, e.g. suspend pension payments
• Foreign occupational pension arrangements will more often be tax treated as national solutions
• Simplification of the rules regarding transfer of pension capital
• Law from 1st of January 2017…….?
Occupational Pension Tax Commission
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Legislation
• Two to three million people in Sweden did use private pension schemes.
……but
• The amount that can be deductible in the taxation has disappeared during 2016.
Private Pension
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Occupational pension
Private savings
National Insurance Scheme
Traditional pension system
Occupational pension
Private savings
Today's pension system
Occupational pension
Private savings
Future pension system
Born in the 40s Born in the 80s
National Insurance Scheme National Insurance Scheme
Legislation
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Changes in pension savings
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Thank you for your attention! Key Topics We Discussed:
Background Information
Country and Company Info &
Background
Social Security
Summary of Social Security
Benefits
Private Practice
Customary Private Employee Benefits:
Type & Level of Benefits / Survey
Data / Plan Design / Benchmarking /
Trends
Taxation
Taxation of benefits (e.g. lump
sum versus pensions) /
Tax treatment of ER and EE
contributions
Administration
Legal requirements re. administration of
benefit plans: actuarial valuations / communications / involvement of
unions/employees
Legislation
Current legislative issues with
significant impact on the funding of the benefit plans / How are employer
and employees affected?
35
© International Group Program
Questions?
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www.igpinfo.com
Contact Info
Pekka Jansson
Manager, Multinational Pooling
+46 (0)70 893 70 89 pekka.jansson@spp.se
Michaela Bruneheim
Head of Insurance
+46 (0)70 726 89 74 michaela.bruneheim@spp.se
www.spp.se
SPP SPP
www.spp.se
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