Increased flexibility with specified private pension
You can choose to have up to 3.5% of your mandatory pension premium go to a specified private pension. Thus, you can get more flexibility around retirement, increase the inheritable assets in pension savings and possibly ease the burden of your first property purchase.
If you choose to use the specified personal pension, your rights to lifelong pension and disability pension will be reduced. It is therefore important that each person carefully evaluates whether the specified personal pension is a good option for him or her and discusses the choice with the custodian of their private pension savings.
Specified private pension at LSR is a good option
LSR's private pension fund is a strong and solid fund where operating costs are kept to a minimum. LSR's private pension department has the sole aim of creating the greatest value for fund members and is not run for profit for anyone other than them. Thus, marketing and sales costs of the private pension department of LSR is next to none, for example.
Fund members who start paying into the specified private pension pay no initial fees and immediately from the first premium payment, the balance starts accumulating. Also, no commission is taken for payouts of the balance, for example, due to disability or age, or due to first property purchase. Avoid additional costs and fees by choosing carefully the custodian of your specified private pension.
What is specified private pension?
- Specified private pensions are part of the mandatory pension savings, which is 15.5% of salary
- Up to 3.5% of the 15.5% mandatory premium can be transferred to specified private pension
- When you pay into the specified private pension, you reduce the contribution to the mutual insurance in return
- The specified private pension will be the inheritable private property of fund members
- Specified private pension can be used to pay into a property loan for a first home purchase
- Payments from the specified private pension are deducted from payments from the Social Insurance Administration
With specified private pension, the premium in mutual insurance is reduced
Your mandatory pension premium is 15.5% of salary and it is assumed that it will be fully accumulated in mutual insurance. With it, you will be entitled to a lifelong pension, spouse pension and disability pension, and may also receive a so-called extrapolation in disability pension and spouse pension, which are valuable rights, especially for those who are younger.
With specified private pension, you reduce your contribution to mutual insurance and instead have up to 3.5% of your salary go to the specified private pension. This means that this part of the premium becomes your private property, but at the same time your rights in mutual insurance are reduced.
The difference between mutual insurance and specified private pension
| Specified private pension | Mutual insurance | |
| Grants life-long pension | No | Yes |
| Grants disability insurance | No | Yes |
| Grants spouse and child pension | No | Yes |
| Contribution becomes the fund member’s property | Yes | No |
| Inherited according to inheritance laws | Yes | No |
| Available for the first property purchase | Yes | No |
| Deducted from payments from TR | Yes | Yes |
Characteristics of specified private pension
Specified private pension can be a good option for many people. Its aim is, amongst other things, to facilitate retirement and increase flexibility, and it can be used tax-free for the purchase of your first property.It is still not suitable for everyone, and in some cases fund members get more for their premiums by letting them go fully into mutual insurance. This applies in particular to fund members of Division A who are in equal rights accrual, where the rights accrual is greater than normal. You can see if you are in equal or age-related accrual on My Pages.
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Mutual insurance premiums provide good trauma insurance that lasts a lifetime. When a fund member has paid premiums for 3 years, they may be entitled to extrapolation, which means that in the event of disability or death, the disability pension or spouse pension is paid as if the fund member had paid premiums until the age of 65. If a fund member becomes disabled at a very young age, they will thus receive lower disability pension payments if they have been paying 12% of their salary in mutual insurance instead of 15.5%. The same applies to spousal pension payments upon the death of a young fund member.
Extrapolation for the years in which a fund member receives disability pension payments also becomes retirement rights. The trauma insurance therefore also guarantees a pension to the fund member while they are not on the labour market due to loss of work capacity and cannot accrue rights in mutual insurance or private pension.
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- Specified private pension can be withdrawn from age 62, regardless of when you retire. This way you can manage pension payments better, e.g. by:
- - reducing your employment rate after the age of 62 and using the specified private pension to reduce income reduction.
- - increasing your income in the first years after retirement.
- Specified private pension is inheritable.
- Specified private pension can possibly be used for the purchase of your first home, or as tax-free payments on a property loan for the first home purchase.
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- Specified private pension will eventually run out, but pensions are paid for life.
- You reduce your premium to the mutual insurance fund by the same amount as payments into the specified private pension. Since the specified personal pension does not include trauma insurance due to disability or death, then:
- - the pension you receive from mutual insurance for the rest of your life is reduced.
- - the pension you are entitled to if you become disabled at some point in your life is reduced.
- - the pension that your spouse would be entitled to at the time of your death is reduced.
The difference between private pension and specified private pension
| Specified private pension | Traditional private pension | |
| Part of mandatory premium | Yes | No |
| Premium payment ratio | Choose between 1.5%, 2.5% or 3.5% | Employee: 2% - 4% Employer: 2% |
| Payout rules | In equal payments from the age of 62-67 Free in full from the age of 67 | Total amount available from the age of 60 |
| Can be disposed into a property loan? | Yes, for the purchase of first property. | Yes, for the purchase of first property. |
| Deducted from payments from TR? | Yes | No |
| Investment authorisations | The same rules as apply to mutual insurance pensions | Broader rules than for mutual insurance pensions |
| Inherited according to inheritance laws | Yes | Yes |