October is here, and it’s the month when the most couples in Sweden get divorced, according to statistics from recent years. You may have heard that divorce rates tend to peak right after the summer months, and it’s no coincidence. The summer break can provide time for reflection on one’s relationship, which sometimes leads to divorce. For many, autumn marks the beginning of a new chapter. However, a separation also brings financial consequences – and it can sometimes be difficult to manage.
Get divorced while you’re still in love. In your thoughts, that is. It’s actually not such a bad piece of advice. Why? Because statistics unfortunately show that nearly half of all marriages end in divorce. Despite this, few couples discuss how a separation would impact their finances – something that, in the worst-case scenario, can become quite expensive.
Tips: How to Avoid Financial Headache
Think Ahead
It may not be "top of mind" when you're newly in love and happy, but you will likely thank yourselves later if you address the issue of your finances early in the relationship. By discussing how a potential separation (or any other change, for that matter—unforeseen events in life can occur, such as someone becoming ill or passing away) would affect your finances, you can create security for the future.
Make Agreements Together
Also, make sure you have the necessary legal agreements in place. If you or your partner have assets or savings that you do not want to share in the event of a divorce, it may be wise to draft a prenuptial agreement. This applies even if you have compensatory savings for one of you or a privately owned pension that you want to protect. By agreeing on what should apply, you can avoid future conflicts and ensure that you are both financially protected.
Create Equality
Have you or your partner taken greater responsibility for the home and family, or is either of you planning to do so? It’s important to remember that pensions are based on your income, which can affect financial equality, especially if one of you needs to work less for a period. Talk about how you can compensate for this, for example, by transferring premium pension rights, which are part of the public pension. If you were to divorce, the transfer would end automatically. It can be wise to discuss any pension differences that may arise, as pensions are often not included in asset division.
Facilitate Future Freedom
Building up your own financial freedom is something you should not underestimate. Having money can provide you with invaluable security if your life faces a change, such as a divorce. Savings in an Investment Savings Account (ISK) or capital insurance are included in asset division, but you can protect your savings through a prenuptial agreement. By thinking ahead and planning now, you can enable a secure and free future for yourself.
Here’s how the pension is affected:
Applies to Married Couples. The Pension is Never Included in a Separation Between Cohabitants.
Your Public Pension
Your public pension is not included in the division of assets. However, as mentioned earlier, you can choose to transfer your premium pension to your partner. This may be relevant if your partner has taken on greater responsibility for the children and home. If you were to divorce, the transfer would automatically end, but your partner would retain the premium pension rights that have already been received.
Your Occupational Pension
As a general rule, occupational pensions, or pensions agreed upon through pension agreements, are not included in the division of assets. However, there are exceptions. If the occupational pension is owned by the employer, which is the most common situation, it should not be included in the division. But if the employment agreement is structured in a certain way, for example, if the pension is owned by you or your partner and the employer only pays the premiums, it may actually be included in the division of assets.
Your Privately Owned Pension
Individual Pension Savings (IPS) and privately owned pension insurance are always included in the division of assets. IPS is an older form of savings that was previously popular due to tax deductions for contributions, but the deductibility has now been limited. Be cautious if you are considering converting an occupational pension owned by your employer into privately owned insurance, as it will then be included in the division of assets. This can affect your finances in the event of a divorce.
Can You Write Agreements to Protect Your Pension?
Your occupational pension owned by your employer cannot be transferred. It belongs to you, regardless of whether you and your partner choose to go your separate ways.
However, when it comes to privately owned pensions, IPS, or private savings, you and your partner can establish a prenuptial agreement. This way, you can ensure that these assets are not included in the division of assets if you were to separate.
