1 ITP

Salaried employees

Illness / retirement / pension / deathITP 1 & 2

2015-01

2 ITP

The ITP Plan

Companies bound by collective agreements have to implement ITP 1, after approval (Collectum), for all salaried employees

ITP 1Plan since 2007

Born in 1979 or later

ITP 2Plan since 1960

Born in or prior to 1978

2015-01

Supplementary pension for salaried employees in industry and commerce

3 ITP

The ITP Plan

ITP 1Defined premiums

18 years Health insurance

25 years Retirement pension Waiver of premium

ITP 2Defined benefits Defined 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

2015-01

4 ITP

Pension commitment

Defined premiumsNo guarantee of the size of the pension

Determined by premiums, return and fees

Cost known

Defined benefitsGuarantees a defined pension

Pension on final salary

The cost is difficult to predict

ITP 1 and ITPK ITP 2

2015-01

5 ITP

When does ITP apply?

Post-employment cover 3 months

ITP 1Irrespective of type of employment- health insurance from 18 years- all benefits from 25 years

ITP 2At least 8 hours/week

Permanent (incl. probation)- all benefits

Limited ≤ 3 months no benefits > 3 months all benefits retroactive from day 1

2015-01

6 ITP

The employer submits a notification of illness after 90 days of illness

Sickness - salary < 7,5 pba

7,5 pba

10% ITPdays 91 - 360

10% collectivelyagreed sick pay

salary

14 365 65 years

64%sicknesscompen-sation

15% ITP

80%sick pay

80%sickness benefit

75% sickness benefit

1 90

2015-01

7 ITP

Sickness - salary > 7,5 pba

14 65 years

80%sick pay

90%collectively agreed sick

pay

65% ITP

17,5 pba

20 iba

30 iba

32,5% ITP

90

The employer submits a report after 90 days of illness

salary

2015-01

8 ITP

Sickness

10% collectivelyagreed sick pay

80%sick pay

90%collectively agreed sick pay 65% ITP

7,5 pba

20 iba

30 iba32,5% ITP

10% ITPdays 91-360

salary

14 365 65 years

64%sicknesscompen-

sation

15% ITP

80%sick pay

75% sickness benefit

1 90

80%sickness benefit

(max. 550 days)

The employer submits a report after

90 days of illness

2015-01

9 ITP

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 15Waiver of premium from achieved qualifying

period of 90 days

2015-01

10 ITP

Waiver of premium insurance - sickness

ITP 1After 14 days of illness and at least25% sick leave

Waiver of premium - in proportion to the degree of work incapacity

ITP 2After 90 days of illness and at least25% sick leave

Waiver of premium - in proportion to the degree of work incapacity (currently full waiver of premium)

Waiver of premium from day 15Waiver of premium from achieved qualifying

period of 90 days

2015-01

11 ITP

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 2Does not apply- recommendation that ITP be maintained for 11 months

In the event of leave for child care, the employer pays the premium

2015-01

12 ITP

Pensionable salary - ITP 1

IncludedGross 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 rulesapply in the event of sickness

2015-01

13 ITP

Retirement pension - ITP 1

25 65 years55

Premium

SEK 36 313/month7,5 iba

• Lifelong or temporary pension• Full or partial

30 %

4,5 %

SALARY

The employer can pay supplementary premiums

2015-01

14 ITP

Premium - ITP 1

7,5 iba is equivalent to SEK36 313/month

4,64%

30,89%

•The salary is reported monthly•Retroactive salary payments become

pensionable in the month they are paid out

2015-01

15 ITP

Cost, ITP 1- example SEK 50,000/month

Salary ≤ SEK 36 313 50,000 – 36 313 = 13,687

Retirement pension Waiver of premium Health insurance *

%4,500,080,06

SEK1,634

2921

%30,000,570,32

SEK4,106

7844

*) salary up to SEK 27 813/monthTotal SEK 5,912 approx. 12% of salary

Total 4,64 1,684 30,89 4,228

2015-01

16 ITP

The employee’s choicesTraditional or unit-linked insurance

Choice of fund manager

Survivors’ cover- repayment cover - family cover

Right to move

Active choice - ITP 1

2015-01

17 ITP

Comparison

TraditionalThe insurance company manages the premiums

Guaranteed basic pension

Bonus

The size of the pension- determined by premiums, return and fees

FundThe individual selects the fund manager

No guaranteed pension

Development of the unit trusts

The size of the pension- value of the unit trusts

2015-01

ITP

No active choice Traditional insurance with Alecta

Choice of fund manager - ITP 1

Traditional pension insurance Alecta AMF

Folksam Skandia Liv

Unit-Linked insurance AMF Danica Pension

SEB Trygg Liv SPP Liv

Swedbank Försäkring

Max. 50%

At least 50%

18 2015-01

19 ITP

Survivors’ cover - ITP 1

Repayment coverPension to survivors

Payment for at least 5 years and at most 20 years

Family coverMax. 4 pba/year

Payment max. 20 years

age-dependent premium

Beneficiariesspouse

partner/cohabitantchild(ren)

2015-01

20 ITP

Family cover - example cost - 1 pba

AgePremium/year

Payment 5 years Payment 20 years25 years SEK 10 SEK 34

35 years SEK 20 SEK 66

45 years SEK 50 SEK 168

55 years SEK 146 * SEK 389

64 years SEK 401 * SEK 475

* ceases at the age of 70

2015-01

21 ITP

Family cover - example aged 45

Gross salary SEK 300,000Payment period 5 years

Premium 4,5 % SEK 13,500

Family cover 1 pba - SEK 50

Gross salary SEK 300,000Payment period 20 years

Premium 4,5 % SE 13,500

Family cover 1 pba - SEK 168

For pension SEK 13,450 For pension SEK 13,332

2015-01

22 ITP

ConsequencesTraditional pension insurance

No repayment cover

No family cover

No active choice - ITP 1

Alecta manages the fund

2015-01

23 ITP

SummarySalaried 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

2015-01

24 ITP

Overview - ITP 1

Health insurance

age 18 age 25 age 55 age 65

Defined premium pension

Waiver of premium

Early drawing

ITP 1

Statutory pension

2015-01

25 ITP

Period of service - ITP 2

Period of service - ITP 2Time worked

Sickness

Parental leave (11 months)

Retirement pension

Family pension

360 months

28 years 65 years

Possible co-ordination of another occupational pension for persons born prior to 1952

2015-01

26 ITP

Pensionable salary - ITP 2

Pensionable salary12,2 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

2015-01

27 ITP

Salary cap - ITP 2

Number of months remaining until retirement

59 - 49 months

48 - 37

36 - 25

24 - 13

12 - 1

Maximum pensionable salary increase

1,20 x the iba increase

1,15

1,10

1,05

1,00

Example - 36 months remaining until retirement2,1% increase in the income base amount in 2015

2,1% x 1,10 = 2,3 % salary increase

2015-01

28 ITP

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/temporaryfull or partial

2015-01

29 ITP

ITPK - supplementary retirement pension

2%

Premium

•Defined premiums •Temporary or lifelong

The employer can pay supplementary premiums

Max. 30 iba

2015-01

30 ITP

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

2015-01

31 ITP

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

2015-01

32 ITP

Comparison

TraditionalThe insurance company managesthe premiums

Guaranteed basic pension

Bonus

The size of the pension- determined by premiums, return and fees

FundThe individual selects the fund manager

No guaranteed pension

Development of the unit trusts

The size of the pension- value of the unit trusts

2015-01

33 ITP

Choice of fund manager- ITPK

Traditional pension insurance Alecta AMF

Folksam Skandia Liv

Unit-Linked insurance AMF Danica Pension

SEB Trygg Liv SPP Liv

Swedbank Försäkring

No active choice Traditional insurance with Alecta

2015-01

34 ITP

Survivors’ cover - ITPK

Repayment coverPension to survivors

Payment for at least 5 years and at most 20 years

Family coverMax. 4 pba/year

Payment max. 20 years

age-dependent premium

BeneficiariesSpouse

Partner/cohabitantChild(ren)

2015-01

35 ITP

Family cover - example aged 45

Gross salary SEK 300,000payment period 5 years

Premium 2,0% SEK 6,000

Family cover 1 pba - SEK 50

Gross salary SEK 300,000payment period 20 years

Premium 2,0% SEK 6,000

Family cover 1 pba - SEK 168

For pension SEK 5,950 For pension SEK 5,832

2015-01

36 ITP

ConsequencesTraditional pension insurance

No repayment cover

No family cover

No active choice - ITPK

Alecta manages the fund

2015-01

37 ITP

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

2015-01

38 ITP

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

2015-01

39 ITP

Summary - ITP 2

Retirem.pension

Familypension

32,5% 16,25%32,5% 32,5%

65%65% 32,5%65%

(333 750)

10%*

(435 750)

-

Defined benefitsDefined

premiums

* days 91 - 360

30 iba

20 iba

7,5

2 %of salary

ITPK

(333 750)

15%

(435 750)

10%

Disability pension sickness benefit sickness compensation

Final payment 62 years

2015-01

40 ITP

Pension - ITP 2

Retirem.pension

Familypension

32,5% 16,25%

32,5%65%

Defined benefitsDefined

premiums

30 iba

20 iba

7,5 iba

2 %of salary

ITPK

-10%

Final payment 62 years

2015-01

41 ITP

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

2015-01

42 ITP

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

2015-01

43 ITP

Summary - ITP 2

SummarySalaried 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

SummaryITPK – defined premium pension

Pay ceiling 30 iba

Flexible drawing of retirement pension

Disability pension

Defined benefits pension

2015-01

44 ITP

Overview - ITP 2

age 28 age 55 age 62 age 65

ITP - retirement pension

ITPK

Early drawing

Final payment

ITPKITP 10% , 65% , 32,5%

Statutory pension

ITP - family pension

Health insurance- - -

2015-01

45 ITP

The cost - based on

ITP 1Gross salary paid per month

ITP 2Age

Pensionable salary

Previously earned ITP and/oranother occupational pension for persons born prior to 1952

2015-01

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 insurance 0,06% 0,32% 0,32%

Waiver of premium* 0,05% 0,05% 0,39%

Individual premiums 28 years

Retirement pension ITPK 2,0% Family pension Compensation 0,60%

* incl. final payment of ITP and ITPK

Total 0,11% 0,37% 0,71%

ITP2015-01

47 ITP

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

maximisedpremium

7,5 iba

5,8%

Individual premium

Missing premium

2015-01

48 ITP

max 30 iba

ITP approx. 12,70

TGL approx. 0,20

TFA 0,01

TRR** 0,30

Premiums - salaried employees

≤ SEK 36,313/month > SEK 36,313/month

ITP* 4,64 30,89

TGL 0,20 0,00

TFA 0,01 0,01

TRR** 0,30 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

2015-01

49 ITP

Maximum cost - ITP 2

< 7,5 pba 7,5 pba-7,5 iba 7,5 iba-30 ibaHealth insurance 0,06 0,32 0,32

Waiver of premium 0,05 0,05 0,39

Retirement pension 5,80 (max.)

5,80(max.) 46,50(max.)

ITPK 2,00 2,00 2,00

Family pension - - *

Compensation 0,60 0,60 0,60

* premium added family pension

Total % 8,51 8,77 * 49,80

2015-01

50 ITP

Funded system - ITP 2

Premiums are paid until retirement age, which mustbe sufficient to cover anticipated pension payments

28 65 years

On new admission

28 40 50 60

On salary rise

65 years

28 40 50 65 years

Termination Paid-up policy

When the payment of premiums ceases

2015-01