How can one-income couples in Sweden save for both partners' retirement?
Accompanying partners of Swedish work permit holders can often find it difficult to find work in Sweden, spending time out of the labour market with knock-on effects for their future finances. How should couples like this save for the future?
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Time out of the labour market in Sweden can have serious consequences for the size of your pension. To qualify for the full guarantee pension, which is for people who have had a lower-than-average income throughout their life, you need to work in Sweden for 40 years between the age of 16 and the age of retirement.
This means that many immigrants who move to Sweden as adults, who don't find work straight after arriving, only qualify for part of the guarantee pension, even if they otherwise meet the requirements.
One important way that couples can provide for the partner who is not working is by putting away their private savings to supplement any pension the partner will qualify for.
SEB household economist Américo Fernández advises couples to look carefully at the rules when setting up savings accounts for individual partners.
"The rules change if you're married or co-living," he told The Local. "If your partner wants to save money for you because you're not on the labour market and you don't want to miss out on pension contributions, then, if you're married, it's important that you make the money the private property of the person you're saving for."
EXPLAINED:
Any savings listed as private property, or enskild egendom in Swedish, will not be split equally between partners if the marriage ends in divorce. Other savings and assets which are not listed as enskild egendom are considered giftorättsgods, and are split equally between both spouses in the case of a divorce.
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This is also important if you're cohabiting partners, but for different reasons, Fernández said.
"If you're co-living with another person and you have the same setup, then it's important to save in your partner's name, meaning that it's their name on the investment account," he said.
"Because if you split up and you're not married, everyone takes their own money with them – the money they have in their own name – and then you split the apartment or house, if you bought it together. But other than that, you don't share anything."
In terms of how much you should save for the partner who isn't working, Fernández says that's "difficult to say".
"You can go onto the websites of different banks – every bank or insurance company has some kind of tool where you can calculate the amount you're losing in pension contributions if you take more of the family responsibility. So you can easily count how much you should save."
SWEDISH PENSIONS:
As a general rule, he said, you could look at what is commonly offered to workers in Sweden.
"If you look at a normal collective bargaining agreement in Sweden, I would say at least 6 percent of your wage should be put aside into a separate savings account for your pension," he said. "That would be the equivalent of a normal occupational pension."
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Aside from planning pensions savings, Fernández also had advice for how to divide family responsibilities to ensure that the impact of leaving the labour market to, for example, care for young children, is minimised.
"The biggest inequalities between genders and between partners starts when they're building a family, that's when we see the biggest gap in salaries and the biggest gap in pensions contributions," he said.
"If possible, try to divide the days you have on parental leave equally. If you have a very uneven division here, that usually creates an even bigger gap if one of you takes more sick leave for your children, for example. In the long run it contributes to women taking more part time jobs. Every step is important, so try to share it as equally as you can."
"If you can't share it equally because it doesn't work for your family situation – which I completely respect – then you're going back to the part of trying to save a little bit more for that specific partner."
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