When it is finally time to start drawing the pension, it turns out to be not one decision but several. You have three pots that begin at different times, you can choose how quickly one of them is paid out, and the timing affects both how large the pension is and how hard it is taxed. I see many people do it quickly and by default, and then regret it, often because some choices cannot be taken back.
Stretch the occupational pension over many years rather than the shortest option of five, so it does not run out while you still need it. Wait with the public pension until after your target retirement age if you can, which gives both a higher amount and a lower tax thanks to the enhanced basic deduction. If you keep working after 66 the tax on your salary is unusually low. And check what is reversible before you click, because most of it is not.
I walk through the order between the pots, how to choose the payout period on your occupational pension, why waiting pays off on tax, how it works to keep working alongside it, and which choices cannot be undone. If you want to stop already in your 40s or 50s, the FIRE guide is the right place. Run your own withdrawal in the withdrawal calculator.
The order between the pots
Your pension comes from three layers: the public pension from the state, the occupational pension from your employers, and possibly your own private saving. You do not have to start them at the same time. A common and often wise setup is to begin with the occupational and the private, and let the public one grow a little longer, since it gets higher for every year you wait. The lowest age for drawing the public pension depends on when you were born: 64 if you were born 1963 to 1969, 65 for 1970 to 1984 and 66 for 1985 to 1997, and it moves with the target retirement age (riktålder); you can start early, but it lowers the amount for the rest of your life.
Occupational pension: for life or over a few years?
The single most common trap hides in the occupational pension's payout period. ITP1 and SAF-LO pay out for life unless you choose otherwise, but you can pick a period as short as five years, and some pots, such as ITPK in the older ITP2 plan and many private pension policies, are set to five years by default. Five years gives high amounts at the start, but then the income falls off a cliff once the pot is empty, often already around 70, when you may have decades left to live. Where you have the choice, pick a lifelong payout or stretch it over 10 or 20 years.
My advice is nearly always to stretch it out. A steady income for life is better than a few fat years followed by a sharp drop. Log in with your occupational-pension provider and check what is set; it is one of the few decisions that makes a real difference to what your everyday life looks like at 75.
Wait past the target age and cut the tax
The timing decides not only the size but also the tax. Two forces pull the same way. One is the divisor: wait with the public pension and the capital is divided over fewer expected years, so the monthly amount is higher. The other is the enhanced basic deduction, which gives you a substantially larger basic deduction from the year after your target retirement age.
The effect is tangible: the same pension is taxed noticeably less after that threshold than before. Draw the pension at the earliest possible age and you get both a higher divisor and the lower, ordinary basic deduction, meaning a lower amount and higher tax. If your finances allow it, it is often worth living off other savings for a few years and letting the pension mature past the threshold.
Working while you draw
You can perfectly well both draw a pension and keep working, and on tax it is even favoured. Someone who has turned 66 by the start of the year gets an enhanced earned-income tax credit, so the tax on work income is unusually low. You also keep building new pension on the salary. For many, a couple of years of part-time work on top of a partly drawn pension is both pleasant and surprisingly profitable.
Some choices cannot be undone
This is the warning I most want people to carry with them. The public pension is flexible: you can pause it and change the withdrawal rate whenever you like. The occupational pension is not. Once you have started a payout, and especially once you have chosen the payout period, it usually cannot be changed. If you chose five years, you are stuck with five years. So check the terms for your particular occupational pension, such as ITP, the plan for privately employed white-collar workers, before you decide, and ask the provider what can be reversed.
My recommendation
Do not treat it as a single click on an afternoon. Set the payout period on your occupational pension deliberately, and lean toward longer rather than shorter. If you can afford it, let the public pension wait until you have passed your target age, because both the amount and the tax argue for it. Keep working a little if you want to; it pays. And read the fine print before, not after, because the most expensive mistakes here are the ones that cannot be undone.