The beginner guide says you only need to do two things, and that is true. But if you want to understand why, how the money is actually calculated, why a high salary produces a completely different pension curve than a low one, and what ITP1 and ITP2 really are, then this is the guide for you. I take the whole system from the ground up, without hiding behind the abbreviations.
Your pension is built in three layers: the general pension (from the state, 18.5% of your income up to the ceiling), the occupational pension (from your employer, governed by collective agreements) and your own savings. The whole system turns on a single number: 7.5 income base amounts, roughly 52 125 kr a month. Below it the state does the heavy lifting; above it the general pension stops growing and the occupational pension takes over with many times the contribution. Understand that break-point and you understand most of it.
I go through the layers one at a time, explain the four big collective agreements and the difference between defined-contribution and defined-benefit pensions, drill into the 7.5-IBB break-point that decides so much, and finish with what the statistics say about where Swedes actually land.
The three layers, quickly
If you have already read the beginner guide you can skip this. In short: your pension comes from three directions. First the general pension (allman pension) from the state, which you earn automatically as long as you work and pay tax. Then the occupational pension (tjanstepension) that your employer pays in on top of your salary. Last, your own savings, entirely voluntary. The three pension layers work completely differently, and the rest of this guide is about how.
Layer 1: the general pension, calculated from scratch
Every year, 18.5% of your pension-qualifying income (PGI) is set aside for the general pension. That share splits in two: 16% goes to the income pension, which tracks national wage growth, and 2.5% to the premium pension, which you get to place in funds yourself. If you do not choose, the premium money lands in the state default fund AP7 Safa, which is both good and cheap, so not choosing is a perfectly reasonable choice.
But, and this is the whole point, the general pension has a ceiling. You only earn on income up to 8.07 income base amounts gross (673,038 kr for 2026), which after the 7% general pension contribution corresponds to a PGI of 7.5 income base amounts. Earn more than that and your general pension does not grow one krona more. One income base amount is 83,400 kr for 2026 and is uprated every year.
At the bottom there is a floor. If you have had low or no income, the guarantee pension tops you up to around 11 988 kr a month for a single person. And when you can draw it is now governed by the target retirement age (riktålder), which rises as we live longer. It is 67 for people born 1960 to 1966, and Pensionsmyndigheten currently projects 68 if you were born 1967 to 1981 and 69 if you were born 1982 to 1997.
Layer 2: the occupational pension, the one that matters most
The occupational pension is money your employer pays in on top of your salary, and for most people it becomes the largest part of the pension over a whole working life. But it is not a given: it almost always comes from a collective agreement. If your workplace has an agreement you get it more or less automatically. If there is no agreement it is not guaranteed at all, and then you have to negotiate it in yourself or treat a salary without it as lower than it looks.
Which agreement you belong to depends on where you work, not on what you choose. There are four big ones.
The four big collective agreements
Roughly speaking, there is one agreement for each part of the labour market. The percentages are the contribution on salary below and above 7.5 income base amounts.
| Agreement | Who it covers | Contribution (below / above 7.5 IBB) |
|---|---|---|
| ITP (Collectum) | Private-sector white-collar employees | 4.5% / 30% |
| Avtalspension SAF-LO (Fora) | Private-sector blue-collar workers | 4.5% / 30% |
| PA16 (SPV) | Central government employees | 6% / 31.5% |
| AKAP-KR (formerly KAP-KL) | Municipal and regional employees | 6% / 31.5% |
Note the pattern: all four pay a modest share on salary below 7.5 income base amounts and a much higher share above. That is no accident, and I will come back to why shortly.
ITP1 vs ITP2: defined contribution or defined benefit
The single most common confusion concerns ITP, the agreement for private-sector white-collar employees. It comes in two variants, and which one you have is usually decided by when you were born. Born 1979 or later: you have ITP1. Born earlier: you probably have ITP2. The difference is not cosmetic; it is about who carries the risk.
ITP1 is defined contribution. A set share of salary is paid in, 4.5% up to 7.5 income base amounts and 30% above, and your final pension depends on how much went in and how your funds performed. You carry the market risk, and you choose the funds. This is where a cheap index choice makes a big difference over decades.
ITP2 is defined benefit and works the other way around. You are promised a certain share of your final salary, roughly 10% on salary up to 7.5 income base amounts and considerably more on salary above, and the employer carries the responsibility for the money being enough. You choose no funds on that part and carry no market risk, but you are also more locked in: a defined-benefit pension rewards those who stay long and finish on a high salary, and is harder to get an overview of. On top of ITP2 sits a small defined-contribution part called ITPK, where you again get to choose a fund.
Neither is objectively better. Defined benefit is safe and predictable; defined contribution is flexible and transparent. But if you have ITP1 or SAF-LO the message is simple: log in with the provider and choose cheap funds, because that is where your pension sits waiting for a decision.
The break-point at 7.5 income base amounts
Now to the number everything revolves around. Both the general pension and the occupational pension change behaviour almost exactly where your salary passes 7.5 income base amounts, roughly 52,125 kr a month for 2026 (625,500 kr a year). Below that line the state does the heavy lifting. Above it the state stops adding and the employer takes over.
| Salary portion | General pension | Occupational pension (ITP1/SAF-LO) |
|---|---|---|
| Below 7.5 IBB (up to ~52,125 kr/mo) | Builds, 18.5% of PGI | 4.5% of salary |
| Above 7.5 IBB | Essentially stops (ceiling at 8.07 IBB) | 30% of the portion |
It looks dramatic, and it is. On a salary just below the ceiling you get a modest occupational pension of 4.5%. On the kronor above the ceiling the contribution multiplies to 30%. It is the agreement’s way of compensating for the general pension having stopped growing: the state steps back, the collective agreement steps in.
This explains something that confuses many high earners: "I earn well but my forecast looks meagre". The forecast often shows only the general pension, which is capped at the ceiling. The large occupational pension on the salary above it is not always as visible. Log in to minPension.se and look at the whole picture before concluding that you save too little.
Where do Swedes actually land?
Theory is one thing, but what does it actually come to? According to the Swedish Pensions Agency, the average total pension is around 23,900 kr a month before tax (2024), and there is a real spread hidden in there: women sit at around 20,600 kr and men at 27,700 kr, largely because the pension reflects a whole working life of pay differences and part-time work.
| Measure | Value |
|---|---|
| Average total pension (2024) | 23,900 kr/mo before tax |
| Of which women / men | 20,600 / 27,700 kr/mo |
| Average general pension (Jan 2025) | 16,400 kr/mo |
| Share coming from the general pension | ~75% |
| Median replacement rate, new retirees | ~73% of final salary |
Two things are worth pausing on. First: on average, about three quarters of the pension comes from the general pension and a quarter from the occupational pension, but that balance flips entirely for high earners, where the occupational pension can become the larger part. Second: a new retiree gets, at the median, around 73% of their final salary, what is called the replacement rate.
Here the break-point becomes concrete. The Pensions Agency notes that middle and high earners get roughly the same share of their former salary in pension, despite the ceiling in the general pension. The explanation is exactly the one we went through: the higher contribution to the occupational pension on salary above 7.5 income base amounts compensates for the state ceasing to pay. The system is built that way on purpose.
Layer 3: your own savings, and when they are needed
The third layer is entirely your own. For the vast majority of employees with an occupational pension the first two layers go a long way, and then I would rather save in an ordinary ISK than in a locked private pension account (IPS): the same market, but full freedom to withdraw whenever I want. The exception is if you lack an occupational pension, for example the self-employed: then an IPS is deductible and becomes in practice your own occupational pension, and your own saving goes from nice to necessary.
What actually decides your pension
When all is said and done, the final sum is governed by four things: how much you earn, how many years you work, what fees your funds take, and when you start drawing. The first three you can influence more than you think; a low fund fee and a couple of extra working years move the final sum more than most guess. If you want to see your own curve, the pension calculator works out the whole picture, and the general pension tool shows where you land against the ceiling.
My recommendation
Understand the break-point and you understand the system. If your salary is below 7.5 income base amounts, the general pension carries you, and your job is to choose cheap funds where you can and not to miss the occupational pension. If you are above it, the occupational pension is your big lever, so make sure you have the right agreement and reasonable fees. After that, most of it is done. Log in to minPension.se once a year, run your forecast in the calculator, and let compounding handle the rest.