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Retirement · Premium pension

The Swedish premium pension (PPM) explained

A practical walkthrough of the premium pension: what it is, what you control, what fees and risk do over time — and what happens if you do nothing at all.

What is the premium pension?

18.5 per cent of your pensionable income goes to the public pension. It is split into two parts.

How 18.5 % of pensionable income is split

Income pension

16 %

Managed by the state and indexed to Swedish wage growth. You make no choices — the money is not invested in funds.

Premium pension

2.5 %

Invested in funds you pick yourself on the fund marketplace. The value follows the market and can fall as well as rise.

You choose

Up to ten funds from the procured marketplace, or leave the money in the state default AP7 Såfa. Switching funds is free.

Your own account

Unlike the income pension, this is a real fund account. You can see exactly how much capital you have and how it develops.

A very long horizon

The capital stays invested until you start drawing your pension — often 30 to 40 years. Returns and fees compound heavily.

Survivor cover is optional

You can share the premium pension with a partner or add survivor cover at payout. Both reduce your own monthly amount.

Calculate your premium pensionA simple tool showing how current capital, contributions, returns and fund fees could grow toward retirement. Everything is calculated in your browser — nothing is saved.

Learn: the premium pension in four steps

From the basics to concrete action.

  1. 1

    Step 1

    The basics

    2.5 per cent of your pensionable income, invested in funds, held in an account that is yours.

  2. 2

    Step 2

    Your options

    Up to ten funds on a reviewed marketplace — or AP7 Såfa as the default. Switching is free and handled by the Pensions Agency.

  3. 3

    Step 3

    The hidden gem: fees

    Funds here are heavily discounted. The gap between 0.2 % and 1.2 % per year can cost hundreds of thousands of kronor over a working life.

  4. 4

    Step 4

    Take action

    Log in, review your allocation, check fees and risk, adjust if needed — then set a yearly reminder.

Common questions

What to keep in mind

Four factors decide the outcome — and three of them are in your hands.

Fund fees

The fee is charged every year regardless of performance. Paying 1.2 % instead of 0.2 % can wipe out roughly a quarter of the final capital over 35 years.

Risk level

Equity funds swing more but have historically delivered the highest long-run returns. Bond funds dampen swings at the cost of expected return.

Age and horizon

Time to withdrawal is the most important risk measure. With 30 years left the market has time to recover; with 3 years it likely does not.

Reviewing

Frequent changes cost more in missed returns than they add. Once a year — fees, risk, allocation — is a sensible cadence.

If you make no active choice: AP7 Såfa

Without a choice your premium pension is invested in AP7 Såfa, the state default. Young savers get a high equity share (above 100 % through leverage), and from age 56 the equity share is automatically reduced in favour of the bond fund. Fees are very low. Not choosing is a perfectly reasonable option — but it is still a choice.

Strategy by life stage

General principles, not individual advice. Start from your own situation.

Many years to retirement

Your horizon is your biggest asset. Fees and equity share matter far more than the bumps along the way.

  • A high share of global equity funds — or simply AP7 Såfa.
  • Keep the total fund fee low, ideally below 0.4 %.
  • Do not sell in a downturn; that is when future returns are built.
  • Avoid spreading capital across ten near-identical funds.

Your premium pension checklist

Tick the steps — your choices are stored in this browser.

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Sources & official information

Always go to the primary source before making pension decisions.