Many people feel that controlling their pension savings after a couple of years of work is a real challenge as their pension benefits are spread out over a number of different insurances in a variety of insurance companies. With current legislation, it is difficult to change insurance with the aim of, for example, obtaining a better overview or securing lower fees. The insurance companies have the possibility to set limits as regards what can be transferred and, even in those cases where transfer is allowed, there are no limits on the amount of fees that can be charged for a transfer; neither are there any limits on the amount of time the insurance provider can take to transfer the insurance.
In a new memorandum to the Act on Income Tax, the Government proposes a number of changes which will simplify and make easier the transfer of pension insurance. The changes are proposed to come into effect in January 2019.
Proposals in brief
- The types of fees which the insurance companies will be allowed to charge for a transfer are defined and clarified and, at the same time, the possibility of combining the value of various pension insurances will be expanded and clarified.
- With the transfer of insurance savings, an insurance company can charge fees directly related to the administrative handling of such a transfer. The costs to be considered in this context are proposed to be determined on the basis of regulations issued by the Government or Finansinspektionen. Furthermore, it is clarified that the company in executing a transfer can also charge fees for those expenses (for example, commission to insurance brokers) arising precisely in relation to that specific, transferred insurance – this is to be a fee which can be charged during a maximum of five years after the establishment of the insurance agreement in question.
- The entire value of one or a number of pension insurances can be transferred, without tax consequences, to another pension insurance with the same individual as the insured. Such a transfer will also be able to take place during the ongoing payment of pension benefits from the transferred insurance. However, payment cannot be initiated by the insurance company to which the insurance has been transferred.
- The consumers are to incur the right to a quick handling of a request for the transfer of the value of an insurance policy to another insurance company. The memorandum makes the assessment that there is no requirement of further legislative measures to enable Finansinspektion to exercise supervision over the period of time incurred by a company in administering a transfer.
- With the aim of making the Tax Agency’s control activities more efficient, the obligation of providing statements of earnings and taxation regarding pension insurance is changed. The memorandum contains a proposal implying that, amongst other things, certain statements of earnings and taxation are to contain the necessary identification details of the insurance agreement, and the memorandum also contains a proposal for an extended respite period for provision of such details.
The proposal does not apply to the collectively agreed upon insurance arrangements which, today, incur no right of transfer. Amongst other things, it would appear that the insured’s (that is, the employer as regards occupational insurance) approval will continue to be a requirement in order to transfer the insurance. The employer will, in other words, continue to need to take a decision when current or previous employees request a transfer of their insurance. In pace with the increasing demand for transfer of pension insurance, it will also be important that the employer has an established policy for the manner in which these matters are to be handled.
Seminar 29 September in Stockholm
On Friday, 29 September, at 8:30 am, PwC will hold a pensions seminar during which we will, amongst other things, discuss the new right to transfer pensions.
The seminar will also address:
- Trends, the changes we see in the market
- What can/should one negotiate with one’s insurance company/broker
- What types of pension arrangements can be considered, advantages and disadvantages
The seminar will be held in Swedish.
010-212 67 55
+46 10-212 67 55