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20 March, 2017

Your pension and how to understand the “orange envelope”

Pension

In the next few weeks, 6.7 million people in Sweden will recieve their “orange envelope” – which is your pension statement. Every other person will be worried by the envelope and many do not even open it. But this approach won’t get your more pension. The Swedish news paper Dagens Nyheter called the Pension Agency and asked them to help out with a little guide to the “orange envelope.”

Original story at Dagens Nyheter in Swedish

If the pension statement gives you the creeps, and you can only manage one thing in the orange envelope, then you should focus on the forecast on page five, says Arne Paulsson at the Pension Agency.

The prognosis is very uncertain if you are 30 years old or younger but it can give you an idea of how much you will receive in retirement. The closer to retirement you are, the more accurate the forecast is and this is the to really think about when to retire, says Arne Paulsson.

He also points out that none of the information in the envelope actually affects your pension. However, what DOES affect it are things like deciding to work full time instead of part time, paying taxes on your salary or woring beyond the age of 65. So basically – stop worrying, open the orange envelope and get your knowledge on.

So how do you actually read the pension information?

The first page displayes  the pension triangle. The base section of the triangle indicates the public pension – the pension you get from the state. Below the triangle you find Three boxes which show how much you earned for your retirement this year, how much you have saved in total and how much money you are expected to receive when you retire.

The second page is about something called “pensionsrätter”. Which basically means the Money that has been paid in to your pension during the year. One part is “inkomstpension” which you do not manage yourself, and the other part is called “premiepension” wich you are free to manage yourself. Make sure that you check on what basis “pensionsrätten” is based on. You should note that in addition to your normal income, you have the right to pension from parental, unemployment and sickness benefits.

The third page shows how the value of your pension has evolved during the year.  You can not affect the change in value of the “inkomstpension” which varies each year. This year it had an increase of 5.8 percent. The increase in value for the premium pension, the portion of your pension that you can actually influence, is shown next to it.There you also get informaion about how much you’ve paid in fees.

Here you also get information about inheritance profits. The pension from those who passed away before they could withdraw their pensions are allocated each year to the survivors. This is nothing you can influence either.

The fourth page focuses on the premium pension, (PPM). This is the small part you can influence yourself by selecting funds and stocks. Here you see where your PPM money is invested and how much you pay in fees. Of course, you also see the value increase in percent. Are you dissatisfied with the results? Change funds. Those who do not make a choice will have this section of their pensions placed with Sjunde AP–fondens Såfa which has a low fee and a usually steady development.

The last page is your future prognosis based on which age you choose to retire. This part of the prognosis usually inteests people as it is easy to see how much more you get if you work a few years extra.

For more information, visit the Pension Agency and choose the language of your choice.

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