Old-age pensions are income linked, which means that national social insurance payments are reduced if the monthly income of pensioners exceeds a certain income limit. The amount of old-age pension is calculated on the basis of an income estimate, and it is important that this is correct.
Pensioners receive an annual income estimate from the Social Insurance Administration (TR) which indicates their estimated income for the next year.
If a pensioner assumes that his or her income will be higher or lower than indicated on the income estimate, he or she must give notice of this within the specified time limit. Otherwise the estimate will be approved.
If there are any changes in income or in the circumstances of the pensioner, it is advisable to inform the Social Insurance Administration (TR). This applies for instance to:
income from employment and pension fund payments,
financial income, e.g. dividends or capital gains from the sale of housing bonds or other securities.
change in marital status.
Every autumn the pension payments for the previous year are re-calculated, based on final information on income from tax returns.
If a pensioner's income turns out to be higher after the re-calculation than was previously estimated, this may result in reduced supplementary payments the following year. Such deductions may be up to 20% of pension payments.
If a pensioner's income exceeds a certain limit (the maximum income level), the pension payments that he or she receives from the Social Insurance Administration (TR) will be reduced.
The maximum income levels vary in amount according to what type of income is involved.
Different types of income reduce different benefit categories; for instance, income from pension funds may reduce income supplements, but not the pension.
In order to minimise the reduction of pension payments, capital income and private supplementary pensions may be distributed over a ten-year period.