Salary sacrifice for state sector employees
According to the state sector pension agreement PA16, your employer can set aside extra pension premiums for your future occupational pension. This is known as salary sacrifice. In order to be able to participate in a salary sacrifice scheme, you need to sign an individual agreement with your employer. Salary sacrifice usually means that you waive part of your gross salary each month in favour of extra pension contributions, but it is also possible to agree to make extra pension contributions without waiving part of your salary.
In certain situations, salary sacrifice can be a good form of supplementary pension savings because you do not pay tax on the pension provision. The money is placed with the pension fund you have chosen for the eligible part of your occupational pension. If you have not made your own choice, the money is placed with Kåpan Pensions.
Before deciding whether to enter into a salary sacrifice arrangement, you should consider the following:
- Salary sacrifice is only favourable for parts of your gross salary above 8.07 income base amounts. In 2023, this corresponds to a monthly salary of approximately SEK 50,000. In order not to negatively affect your national public pension you need to have a salary that exceeds this amount after the salary sacrifice.
- Some collectively agreed benefits may be negatively affected, e.g. salary supplements in the event of illness and parental leave. If you need to be off work for a longer period due to illness or parental leave, you should ensure that your salary sacrifice arrangement is paused.
- If you are covered by Section 2 of the PA16 pension agreement, (i.e. if you were born before 1988), your salary sacrifice arrangement may only continue until the month you turn 65. After the age of 65, you need to make a new agreement with the employer on salary sacrifice that applies until the month you turn 67. If you are covered by Section1 of the pension agreement, an agreement with your employer can be made until you reach the age specified in the Swedish Employment Act, currently 68 years.
- Withdrawal of the electable part of your occupational pension can take place for a period of at least 10 years. See the National Government Employee Pensions Board (SPV) website for more information
In addition to salary sacrifice, you can also exchange the value of annual holiday leave days for pension contributions. You can do this regardless your salary level, as it does not affect your monthly salary or salary-based benefits. An annual holiday leave day is worth 5.09% of your monthly salary, including holiday pay supplement.
To find out about salary sacrifice arrangements at your workplace, contact your employer’s HR department. See also the Saco-S brochure Enskild överenskommelse (in Swedish only).