ITP2
In addition to the statuary pension, nearly all employees have an occupational pension paid by their employer. For private sector employees, a pension plan called ITP (Supplementary pensions for salaried employees) is available.
ITP 2 is based on a collective agreement between Svenskt Näringsliv and PTK. It is a defined benefit plan and is available for employees born in 1978 and earlier.
ITP 1
On July 1st, 2007, a new ITP plan came into effect. The new plan is designated for individuals born in 1979 or later and is a fully defined contribution plan. It is even possible to insure the ITP 1 plan.
Book reserve method and individual agreements
When a company reaches an agreement with individual employees or groups of employees, pensions in book reserve method with credit insurance is an alternative to buying pension insurance. For certain types of pensions, for example conditional promises and pensions that do not fit within the limits of pension deductibility, book reserve method with credit insurance proves to be beneficial. An alternative to the book reserve plan would be to purchase an endowment insurance which brings high costs.
Retirement pension
If a company chooses to offer their employees the opportunity of entering early retirement, also known as retirement pension, the commitment may enter as a liability and be credit insured. The retirement pension in book reserve can be applied to white collar workers and blue collar workers. In case of a larger group of employees, who should receive a retirement pension within a certain time period, a limit can be granted for groups of one or more companies.
Foreign markets
Subsidiaries abroad often have significant pension obligations. PRI Pensionsgaranti’s credit insurance can also be used outside Sweden in a profitable way as a part of funding strategy.
A credit insured policy can be relevant in different contexts, for example:
- In order to manage liquidity flows when regulations require deficit management.
- As a permanent part of management strategy.
- Premium loans from the foundation or pension fund.
Credit insurance provides benefit to all stakeholders in a retirement plan, and the company receives a profitable financial settlement.
Collateral for members of pension plans can be improved or maintained without the company having to make large and unwanted liquidity additions into the pension fund.
For the pension fund managers, credit insurance can contribute to shifting focus from short-term needs and time-consuming discussion to” long-term success issues” for the pension fund.
Today, solutions are available in the UK, Ireland, Finland and Norway.
Supplementary pension contribution
If the company has an established pension fund foundation, supplementary pension contributions from the foundation of PRI Pensionsgaranti can provide an opportunity of easy and flexible financing. The employees’ pensions are fully secured through credit insurance, and the company together with the board of the foundation determine the terms of the loan.