Keep Your New Year’s Resolution – How to Find the Optimal Savings Plan for You

1 januari 2025

ca 2 min lästid

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New year, new opportunities! Are you eager to kickstart your savings but unsure which saving option suits you best? Here’s a guide to help you choose a savings plan that matches your needs.

Remember: Investments involve risk.

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Private Endowment Insurance and ISK – Save 150,000 kronor Tax-Free

Private endowment insurance and ISK are two saving options that have several similarities, but also some differences. They are popular due to their flexibility, making it easy to start saving in mutual funds. You can also switch funds without having to pay taxes on individual gains – instead, you pay a low annual standard tax.

A new feature for 2025, which has been widely discussed, is that from January 1st, you can save up to 150,000 kronor tax-free. In 2026, this tax-free level is proposed to be further increased to 300,000 kronor.

Do These Saving Options Suit You?

Private endowment insurance and ISK might be right for you if you want flexible savings and the ability to switch funds frequently. Both saving options also make it easy to withdraw your money, although private endowment insurances often have a shorter binding period, for example, under a year. They are suitable for long-term savings, and withdrawals are generally free of charge. It is also easy to start with monthly savings.

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Salary Exchange – Can Give You 20% More if You Have the Opportunity!

Salary exchange means that you swap part of your salary for an extra contribution to your pension. Your employer needs to offer you the opportunity for you to take advantage of the benefit. You also need to have a salary after the salary exchange deduction that exceeds a certain amount, 54,204 kronor per month (2025), for you to benefit from it. If you have a lower salary than that, your general pension and other important social insurance benefits will decrease. It is also good to keep in mind that you can normally start withdrawing your money at the earliest at the age of 55.

Does This Saving Option Suit You?

If you have the opportunity to take advantage of the benefit, our calculation shows that, despite the tax exemption on amounts up to 150,000 kronor in 2025 for private endowment insurance and ISK, it can become a more profitable saving option. The reason for this is that the tax is low and you defer income tax until it is time to withdraw your pension. When you withdraw the money, the tax you need to pay can also very well be lower, as pension withdrawals for many are lower compared to the salary they earn today.

Our calculation shows that if you save 3,500 kronor per month for ten years and get an annual increase in value of 5%, you have the opportunity to get about 20% more in pension compared to equivalent savings in private endowment insurance and ISK. This is provided that you withdraw your money over ten years.

How we Calculated 

  • Starting in 2025, you can save up to 150,000 kronor tax-free in your private endowment insurance or ISK. The tax exemption covers your total savings in private endowment insurance and/or ISK. This means you cannot save 150,000 kronor tax-free in each account separately (if you have multiple accounts).

    What will the tax be if you save more than that? You will be taxed on the portion of your savings that exceeds the limit. If you save 250,000 kronor, you will pay a standard tax on 100,000 kronor.

    You will pay the same amount of tax for a private endowment insurance as for an investment savings account (ISK). However, technically, the savings options are taxed differently. The main difference is that the tax for private endowment insurance is deducted directly from the insurance’s value four times a year, while the tax for ISK is included in your tax return and is pre-printed.

    For 2025, the standard tax rate has been set at 0.888% for both private endowment insurance and ISK.

  • There are some important differences between private endowment insurance and ISK. One of these is how you can withdraw your money. With private endowment insurance, you can decide how and when the money should be paid out, for example, monthly as an extra addition to your pension. You can also choose that the money should be paid out to a specific person. With an ISK, you need to actively sell parts of your holdings to withdraw the money.

    Another important difference is that private endowment insurance includes a repayment protection. If you were to pass away before the money has been paid out, your savings will go to the beneficiaries you have chosen, and the amount paid out usually corresponds to 101 percent of the value of your private endowment insurance. Beneficiaries are primarily your spouse/partner and secondly your children, but you can change this if you wish.

    In contrast, an ISK does not include repayment protection. If you were to pass away, the money will go to your estate and be distributed according to inheritance laws or your will.

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Scenario 1: Salary Exchange

You exchange 3,500 kronor per month for 10 years. After 10 years, you start withdrawing the money over a period of 10 years. You can then withdraw approximately 4,680 kronor per month.

Scenario 2: Private Endowment Insurance

Instead of salary exchange, you save 2,526 kronor per month in a private endowment insurance (after 28% tax on 3,500 kronor) for 10 years. After 10 years, you start withdrawing the money over a period of 10 years. You can then withdraw approximately 3,866 kronor per month. 21% less compared to salary exchange.

Scenario 3: ISK

Instead of salary exchange, you save 2,526 kronor per month in an ISK (after 28% tax on 3,500 kronor) for 10 years. After 10 years, you start withdrawing the money over a period of 10 years. You can then withdraw approximately 3,982 kronor per month. 18% less compared to salary exchange.

The calculation is based on a tax rate for ISK and capital insurance of 0.888 percent and a tax rate of 28% upon payout (without increased basic deduction) for all savings forms. The tax may vary depending on factors such as your income and age. In the example, we have also included that the employer contributes an additional 6 percent to the saved amount in salary exchange (which is common).

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To the Savings Guide

Please note that the examples are only standard calculations that highlight the differences between various savings forms. Inflation has not been taken into account.

Things to Consider Regarding Risk

Investing in funds has been a good way to grow your money. But remember that markets are unpredictable and there is no guarantee of returns. The value can both rise and fall, and you might not get back the money you initially invested. So be prepared for fluctuations and invest wisely.

Publicerad 2025-01-01