Capital Pension

However, even though you can no longer open or contribute to a capital pension, it does not affect existing capital pensions that have already been established. Existing capital pensions will continue to function as before, and the savings that have already been invested will remain in the account and be managed according to the chosen investment strategy. 

It is important for those who already have a capital pension to be aware of changes in the legislation and understand the potential consequences for their retirement savings. Although contributions to capital pensions are not longer possible, there are still other savings options available, such as annuity pensions, life annuities, and retirement savings. A pension advisor can help you choose the pension savings option that makes the most sense for you and your needs. 

What is a capital pension?

A capital pension is a type of retirement savings that allowed you to save for retirement through investments. The money deposited into a capital pension account was invested in various assets such as stocks, bonds or alternatives, with the goal of growing the capital over time. When you reached retirement age, your capital pension was paid out as a lump sum. However, if you wanted to, you could choose to convert the capital pension into a life annuity, which would provide you with a continuous, lifelong payment instead. 

How does a capital pension work?

A capital pension was a savings plan where contributions were invested in various assets such as stocks, bonds, alternatives, etc., with the aim of increasing retirement savings over time. Contributions to capital pensions were tax-deductible, meaning you could reduce your taxable income and pay less tax – there was thus a tax advantage to this type of pension savings. 

Capital pensions no longer exit and have been replaced by retirement pensions. Retirement pensions also offer a range of benefits that you can consider when planning your retirement savings. 

There are many ways to structure a retirement savings plan. Therefore, it might be a good idea to seek advice from a pension advisor to learn more about the types of pension savings available today, now that the capital pension is no longer an option. 

Benefits of capital pension 

If you already have a capital pension as part of your retirement savings, it can offer you several benefits including: 

• Tax advantages: Although it is no longer possible to receive tax deductions for contributions to a capital pension, it is still advantageous because the savings are creditor-protected. Additionally, you have the option to convert the capital pension into either an annuity pension or a life annuity. Furthermore, you can transfer the capital pension to another financial institution or pension company.
• Long-term investment potential: A capital pension allows you to invest your contributions in various assets with the goal of growing your capital over time. By utilizing the long investment horizon, you can potentially achieve an attractive return and build a solid retirement savings plan for your later years.
• Flexibility at retirement: When you reach retirement age, you can choose to have your savings from the capital pension paid out in different ways, depending on your needs and preferences. You can choose a lifelong pension that provides you with a regular income stream in your retirement, or you can opt for a lump sum payout if you prefer to receive your money all at once.
• Protection against creditors: The money in your capital pension is generally protected from creditors in the event of personal bankruptcy. This provides you with additional security, as your retirement savings are safeguarded from potential creditors and debt.
• Beneficiaries: If you were to pass away before the payout of your capital pension begins, your surviving relatives would typically have the right to receive the remaining funds in your pension account. This can provide financial support to your loved ones and ensure that your retirement savings are not lost. 

Reorganization of a capital pension 

When it comes to your capital pension, it is important to know that you have the option to reorganize it into either an annuity pension or a life annuity. This option can be attractive, especially if your financial needs or life situation change over time. Here are some key considerations to take into account when considering reorganizing your capital pension:

• Flexibility: By reorganizing into an annuity pension or life annuity, you can gain greater flexibility in your payouts. You can choose between ongoing payments or a lump sum payout depending on your needs.
• Tax Considerations: It is important to be aware of the tax implications of reorganizing your capital pension. Depending on the type of payout you choose, the tax rules may vary, so it may be a good idea to seek professional advice.
• Risk and Return: Also consider the long-term investment strategy for your pension. When you reorganize your capital pension, you can adjust your investment portfolio to reflect your current risk preferences and pension goals.

By considering these factors and seeking advice from a pension advisor or financial expert, you can make informed decisions about reorganizing your capital pension, ensuring you get the solution that best fits your individual needs and goals for the future.

Get Independent Pension Advice at Söderberg & Partners

When it comes to planning your capital pension, Söderberg & Partners can be your trusted partner throughout the process. We offer independent pension advice that can help you make the right decisions, whether you are interested in retirement savings, annuity pensions, or life annuities.

Our experienced advisors are ready to guide you through the process and ensure that your pension savings match your needs and goals for the future. Book a meeting today so we can help you with the perfect plan for your financial future.