Legislative change – More Flexible Rules for Payments from Pension Insurance and Pension Savings Accounts

Pension savings are, in some respects, tax-advantaged, and therefore specific requirements are set to ensure that the savings are genuinely for retirement and not just a regular capital investment.

One such requirement is the so-called five-year rule, which means that the capital in a pension insurance or pension savings account, which is to be paid out when the insured or pension saver reaches a certain age, cannot be paid out over a period shorter than five years. During the first five years, the pension must be paid out in equal amounts at each payment occasion or in increasing amounts. The five-year rule has been interpreted to mean that pension payments cannot be interrupted during the first five years after the pension has started to be paid out.

In a government proposal the government suggests that during the first five payment years, it should be possible to pause an ongoing payment of old-age pension and survivor’s pension from a pension insurance and also to extend the payment period after it has started. Therefore, the five-year rule is proposed to be supplemented with exception provisions that specify how future payments should be made if the insured makes such a pause. Proposals are also made on how the payment period should be determined if the insured chooses to extend the payment period after the payment has started. Corresponding changes are also proposed for payments from pension savings accounts. The purpose of the proposed changes is to enable more flexible retirement.

The Riksdag has approved the proposal which entered into effect on 1 January 2025.

Read more here.