Country Panel Presentation: Sweden...• The Swedish welfare state aims to embrace everyone • Most Swedes seem content with what they get for the taxes they pay • Fully tax-financed

© 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

1

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.


Key Topics

Background Information

Country and Company Info &

Background

Social Security

Private Practice

Taxation Administration Legislation

2


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)


Background Information About SPP

500 employees

SEK 153 bn Under management

700 000 individuals

17 000 companies

100%

Of AUM Sustainable invested


Key Topics


Social Security

Summary of Social Security

Benefits

Private Practice


5


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



• 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



• 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)



• Free of charge for children until they turn 20

• Adults, high-cost protected quality care

• From checkups to braces

Dental care (residence-based)



• 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)



• 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)



• 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)



• 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)


Two kinds of pension in the system

Employer pays 10,21%

Charge 18,5 % of salary

Employee pays 7 %

Pension

Premium- pension Income-

pension


"Tic-the-box-market"…..

• ….Employer pay…Employee choose….


"Tic-the-box-market"….

……Employer pay….Employee choose….



• Employer: 31,42 % of gross earnings

• Employee: 7 % on salary up to SEK 478 551 (EURO 53 172)

• Contributions are tax deductible

Contributionss


Key Topics


Social Security

Private Practice

Customary Private Employee Benefits:

Type & Level of Benefits / Survey

Data / Plan Design / Benchmarking /

Trends


18


• 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


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


Private Practice

• Effective from 1 July 2007

• Two plans, ITP1 and ITP2

• DC / DB

ITP Agreement for Salaried Employees


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


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


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


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


Key Topics


Social Security

Private Practice

Taxation

Taxation of benefits (e.g. lump

sum versus pensions) /

Tax treatment of ER and EE

contributions

Administration Legislation

26


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


Key Topics


Social Security

Private Practice

Taxation Administration

Legal requirements re. administration of

benefit plans: actuarial valuations / communications / involvement of

unions/employees

Legislation

28


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


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


Key Topics


Social Security

Private Practice


Current legislative issues with

significant impact on the funding of the benefit plans / How are employer

and employees affected?

31


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


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


Occupational pension

Private savings

National Insurance Scheme

Traditional pension system


Private savings

Today's pension system


Private savings

Future pension system

Born in the 40s Born in the 80s

National Insurance Scheme National Insurance Scheme

Legislation

34

Changes in pension savings


Thank you for your attention! Key Topics We Discussed:


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


Questions?


www.igpinfo.com

Contact Info

Pekka Jansson

Manager, Multinational Pooling

+46 (0)70 893 70 89 [email protected]

Michaela Bruneheim

Head of Insurance

+46 (0)70 726 89 74 [email protected]

www.spp.se

SPP SPP

www.spp.se

Documents

Country Panel Presentation: Sweden...• The Swedish welfare state aims to embrace everyone • Most Swedes seem content with what they get for the taxes they pay • Fully tax-financed