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Salaried employees Illness / retirement / pension / death ITP 1 & 2 ITP 12015-01.

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Presentation on theme: "Salaried employees Illness / retirement / pension / death ITP 1 & 2 ITP 12015-01."— Presentation transcript:

1 Salaried employees Illness / retirement / pension / death ITP 1 & 2 ITP

2 The ITP Plan Companies bound by collective agreements have to implement ITP 1, after approval (Collectum), for all salaried employees ITP 1 Plan since 2007 Born in 1979 or later ITP 2 Plan since 1960 Born in or prior to 1978 ITP Supplementary pension for salaried employees in industry and commerce

3 The ITP Plan ITP 1 Defined premiums 18 years Health insurance 25 years Retirement pension Waiver of premium ITP 2 Defined benefitsDefined premiums 18 years Risk insurance - health insurance - waiver of premium ITPK (28 years) - retirement pension - survivors' cover 28 years Retirement pension Family pension The employer can offer salaried employees with salaries > 10 iba - alternative ITP - ITP 1 ITP

4 Pension commitment Defined premiums No guarantee of the size of the pension Determined by premiums, return and fees Cost known Defined benefits Guarantees a defined pension Pension on final salary The cost is difficult to predict ITP 1 and ITPK ITP 2 ITP

5 When does ITP apply? Post-employment cover 3 months ITP 1 Irrespective of type of employment - health insurance from 18 years - all benefits from 25 years ITP 2 At least 8 hours/week Permanent (incl. probation) - all benefits Limited ≤ 3 months no benefits > 3 months all benefits retroactive from day 1 ITP

6 The employer submits a notification of illness after 90 days of illness Sickness - salary < 7,5 pba 7,5 pba 10% ITP days % collectively agreed sick pay salary years 64% sickness compen- sation 15% ITP 80% sick pay 80% sickness benefit 75% sickness benefit 190 ITP

7 Sickness - salary > 7,5 pba years 80% sick pay 90% collectively agreed sick pay 65% ITP 1 7,5 pba 20 iba 30 iba 32,5% ITP 90 The employer submits a report after 90 days of illness salary ITP

8 Sickness 10% collectively agreed sick pay 80% sick pay 90% collectively agreed sick pay 65% ITP 7,5 pba 20 iba 30 iba 32,5% ITP 10% ITP days salary years 64% sickness compen- sation 15% ITP 80% sick pay 75% sickness benefit % sickness benefit (max. 550 days) The employer submits a report after 90 days of illness ITP

9 Waiver of premium insurance ITP 1 - after 14 days of illness - parental leave (13 months) - leave for child care (at least 25 %) Waiver of premium - in proportion to the degree of work incapacity Premiums are paid from the age of 25 ITP 2 - after 90 days of illness and at least 25% sick leave Waiver of premium - in proportion to the degree of work incapacity (currently full waiver of premium) Waiver of premium from day 15 Waiver of premium from achieved qualifying period of 90 days ITP

10 Waiver of premium insurance - sickness ITP 1 After 14 days of illness and at least 25% sick leave Waiver of premium - in proportion to the degree of work incapacity ITP 2 After 90 days of illness and at least 25% sick leave Waiver of premium - in proportion to the degree of work incapacity (currently full waiver of premium) Waiver of premium from day 15 Waiver of premium from achieved qualifying period of 90 days ITP

11 Waiver of premium insurance - parental leave ITP 1 Period of parental benefit (13 months) Leave for child care (at least 25%) Waiver of premium - in proportion to the degree of work incapacity ITP 2 Does not apply - recommendation that ITP be maintained for 11 months In the event of leave for child care, the employer pays the premium ITP

12 Pensionable salary - ITP 1 Included Gross salary paid/month - overtime, holiday compensation, holiday pay - bonus, commission, performance bonus, etc. No pay ceiling Not included (example) Per diem allowance, travel reimbursement, compensation for use of own car Congestion tax Non-statutory sick pay, e.g. collective agreement Taxable benefits, fully or partially All types of parental pay Costs for use of own car Special rules apply in the event of sickness ITP

13 Retirement pension - ITP years 55 Premium SEK /month 7,5 iba Lifelong or temporary pension Full or partial 30 % 4,5 % SALARY The employer can pay supplementary premiums ITP

14 Premium - ITP 1 7,5 iba is equivalent to SEK /month 4,64% 30,89% The salary is reported monthly Retroactive salary payments become pensionable in the month they are paid out ITP

15 Cost, ITP 1 - example SEK 50,000/month Salary ≤ SEK ,000 – = 13,687 Retirement pension Waiver of premium Health insurance * % 4,50 0,08 0,06 SEK 1, % 30,00 0,57 0,32 SEK 4, *) salary up to SEK /month Total SEK 5,912 approx. 12% of salary Total4,641,68430,894,228 ITP

16 The employee’s choices Traditional or unit-linked insurance Choice of fund manager Survivors’ cover - repayment cover - family cover Right to move Active choice - ITP 1 ITP

17 Comparison Traditional The insurance company manages the premiums Guaranteed basic pension Bonus The size of the pension - determined by premiums, return and fees Fund The individual selects the fund manager No guaranteed pension Development of the unit trusts The size of the pension - value of the unit trusts ITP

18 No active choice Traditional insurance with Alecta Choice of fund manager - ITP 1 Traditional pension insurance AlectaAMF FolksamSkandia Liv Unit-Linked insurance AMFDanica Pension SEB Trygg LivSPP Liv Swedbank Försäkring Max. 50% At least 50% ITP

19 Survivors’ cover - ITP 1 Repayment cover Pension to survivors Payment for at least 5 years and at most 20 years Family cover Max. 4 pba/year Payment max. 20 years age-dependent premium Beneficiaries spouse partner/cohabitant child(ren) ITP

20 Family cover - example cost - 1 pba Age Premium/year Payment 5 years Payment 20 years 25 years SEK 10 SEK years SEK 20 SEK years SEK 50 SEK years SEK 146 * SEK years SEK 401 * SEK 475 * ceases at the age of 70 ITP

21 Family cover - example aged 45 Gross salary SEK 300,000 Payment period 5 years Premium 4,5 %SEK 13,500 Family cover 1 pba- SEK 50 Gross salary SEK 300,000 Payment period 20 years Premium 4,5 %SE 13,500 Family cover 1 pba- SEK 168 For pensionSEK 13,450 For pensionSEK 13,332 ITP

22 Consequences Traditional pension insurance No repayment cover No family cover No active choice - ITP 1 Alecta manages the fund ITP

23 Summary Salaried employees born in 1979 or later Applies irrespective of the type of employment Disability pension from age 18 Defined premium pension from age 25 No pay ceiling Active choice Choice of repayment cover and family cover Flexible drawing of retirement pension Summary - ITP 1 ITP

24 Overview - ITP 1 Health insurance age 18age 25 age 55age 65 Defined premium pension Waiver of premium Early drawing ITP 1 Statutory pension ITP

25 Period of service - ITP 2 Time worked Sickness Parental leave (11 months) Retirement pension Family pension 360 months 28 years65 years Possible co-ordination of another occupational pension for persons born prior to 1952 ITP

26 Pensionable salary - ITP 2 Pensionable salary 12,2 x fixed monthly salary Commission, bonuses, etc (average of last 3 years) Regular shift allowance, on-duty remuneration Travel time remuneration Holiday pay on variable salary portions as above (0,5% per holiday day) Entirely free board or lodging Max. 30 iba The employer can report the unreduced salary in the event of - waiving of salary for a benefit - partial retirement In the event of pay rises within five years of retirement age, special rules apply ITP

27 Salary cap - ITP 2 Number of months remaining until retirement months Maximum pensionable salary increase 1,20 x the iba increase 1,15 1,10 1,05 1,00 Example - 36 months remaining until retirement 2,1% increase in the income base amount in ,1% x 1,10 = 2,3 % salary increase ITP

28 Retirement pension - ITP 2 32,5 % 30 iba 65 % 20 iba 10 % 7,5 iba SEK 1,743,000/year SEK 1,162,000/year SEK 435,750/year age 55 at the earliest lifelong/temporary full or partial ITP

29 ITPK - supplementary retirement pension 2% Premium Defined premiums Temporary or lifelong The employer can pay supplementary premiums Max. 30 iba ITP

30 Supplementary premiums - ITP 1 and ITPK Supplementary premiums Extra pension provisions May only be taken out for salaried employees who have active ITP 1 or ITPK The premium can be - ongoing/month or one-off premium - fixed or % of salary - premium ladder Waiver of premium insurance - mandatory for ongoing premiums Collectum levies an administration charge on premiums paid in ITP

31 The salaried employee chooses Traditional or unit-linked insurance Choice of fund manager Survivors’ cover - repayment cover - family cover Right to move Active choice - ITPK ITP

32 Comparison Traditional The insurance company manages the premiums Guaranteed basic pension Bonus The size of the pension - determined by premiums, return and fees Fund The individual selects the fund manager No guaranteed pension Development of the unit trusts The size of the pension - value of the unit trusts ITP

33 Choice of fund manager - ITPK Traditional pension insurance AlectaAMF FolksamSkandia Liv Unit-Linked insurance AMFDanica Pension SEB Trygg LivSPP Liv Swedbank Försäkring No active choice Traditional insurance with Alecta ITP

34 Survivors’ cover - ITPK Repayment cover Pension to survivors Payment for at least 5 years and at most 20 years Family cover Max. 4 pba/year Payment max. 20 years age-dependent premium Beneficiaries Spouse Partner/cohabitant Child(ren) ITP

35 Family cover - example aged 45 Gross salary SEK 300,000 payment period 5 years Premium 2,0%SEK 6,000 Family cover 1 pba- SEK 50 Gross salary SEK 300,000 payment period 20 years Premium 2,0%SEK 6,000 Family cover 1 pba- SEK 168 For pensionSEK 5,950 For pensionSEK 5,832 ITP

36 Consequences Traditional pension insurance No repayment cover No family cover No active choice - ITPK Alecta manages the fund ITP

37 Family pension - ITP 2 16,25 % 30 iba 32,5 % 20 iba - 7,5 iba SEK 1,743,000/year SEK 1,162,000/year SEK 435,750/year Beneficiaries spouse, children 20 years Lifelong pension Potential to abstain from future premiums Reinforce ITPK ITP

38 Final payment - ITP 2 A salaried employee who leaves his job no earlier than the month after his 62nd birthday, in order to retire, has the ITP and ITPK premiums paid by the insurance until his 65th birthday ITP

39 Summary - ITP 2 Retirem. pension Family pension 32,5% 16,25%32,5% 65% 32,5%65% ( ) 10%* ( ) - Defined benefits Defined premiums * days iba 20 iba 7,5 2 % of salary ITPK ( ) 15% ( ) 10% Disability pension sickness benefit sickness compensation Final payment 62 years ITP

40 Pension - ITP 2 Retirem. pension Family pension 32,5% 16,25% 32,5%65% Defined benefits Defined premiums 30 iba 20 iba 7,5 iba 2 % of salary ITPK -10% Final payment 62 years ITP

41 Alternative ITP - ITP 2 A salaried employee with a salary above 10 iba (SEK 581,000 in 2015) can, by agreement with the employer, choose Alternative ITP (released premium, premium ladder, etc.) ITP 1 ITP

42 Changes - ITP 2 Family Cover (2007) - increased number of base amounts and payment period - family cover Retirement Pension (2007) - temporary or lifelong Family Pension (2008) - possibility to reinforce ITPK Coordination Regulations (2009) - abolished for those born in 1952 and later Salary Cap (2010) - follows changes in the income base amount as per table Retirement Pension (2011) - draw fully or partially Supplementary Premiums (2011) - to ITPK ITP

43 Summary - ITP 2 Summary Salaried employees born in 1978 or earlier Permanent (incl. probation) - at least 8 hours/week Limited employment period (> 3 months) Family pension salary > 7,5 iba Final payment 62 years Summary ITPK – defined premium pension Pay ceiling 30 iba Flexible drawing of retirement pension Disability pension Defined benefits pension ITP

44 Overview - ITP 2 age 28 age 55age 62age 65 ITP - retirement pension ITPK Early drawing Final payment ITPK ITP 10%, 65%, 32,5% Statutory pension ITP - family pension Health insurance ITP

45 The cost - based on ITP 1 Gross salary paid per month ITP 2 Age Pensionable salary Previously earned ITP and/or another occupational pension for persons born prior to 1952 ITP

46 Premiums - ITP 2 Premiums 18 years Salary 7,5 pba Salary 7,5 pba-7,5 iba Salary 7,5 iba-30 iba Health insurance0,06%0,32% Waiver of premium*0,05% 0,39% Individual premiums 28 years Retirement pensionITPK 2,0%Family pensionCompensation 0,60% * incl. final payment of ITP and ITPK Total 0,11%0,37%0,71% ITP

47 Premium maximisation - ITP 2 The premium for retirement pension is max. - 46,5% of salary portions > 7.5 iba – 30 iba - 5,8% of salary portions up to 7.5 iba maximised premium 7,5 iba 5,8% Individual premium Missing premium ITP

48 max 30 iba ITP approx. 12,70 TGL approx. 0,20 TFA0,01 TRR**0,30 Premiums - salaried employees ≤ SEK 36,313/month > SEK 36,313/month ITP*4,6430,89 TGL0,200,00 TFA0,01 TRR**0,30 * Health and waiver of premium insurance included ** 0,70% for local collective agreement companies Total % 5,15 31,20 Total % approx. 13,20 ITP 1 ITP 2 ITP

49 Maximum cost - ITP 2 < 7,5 pba7,5 pba-7,5 iba7,5 iba-30 iba Health insurance0,060,32 Waiver of premium0,05 0,39 Retirement pension 5,80 (max.) 46,50 (max.) ITPK2,00 Family pension--* Compensation0,60 * premium added family pension Total %8,518,77 * 49,80 ITP

50 Funded system - ITP 2 Premiums are paid until retirement age, which must be sufficient to cover anticipated pension payments 2865 years On new admission On salary rise 65 years years Termination Paid-up policy When the payment of premiums ceases ITP


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