Indexation of ITP 2 book method pension reserve schemes

The benefits under ITP 2 book method pension reserve schemes will be indexed by 6.48 per cent as of 1 January 2024.

The indexation corresponds to the increase in the consumer price index (CPI) from September 2022 to September 2023. The decision to index ITP 2 book method pension reserve schemes was taken by the board of PRI Non-Profit Association and corresponds, according to standard practice, to Alecta's decision regarding indexation.

The indexation means that pensions that are being disbursed will be increased by 6.48 per cent. The value of accrued pensions that have not yet begun to be disbursed (the paid-up value) is increased by the same amount. 

Under Swedish accounting rules, pension indexation has an impact on operating profit. The increase in liabilities does not have an effect on cash flow per se; instead, it affects only the balance sheet and income statement. However, the cash flow is affected because the actual pension payments being disbursed become higher. The higher pension disbursements also affect special payroll tax and tax on returns from pension funds. The greatest impact is on the special payroll tax, currently 24.26 per cent, which is added to the inflation-driven increase in the pension liability.

The pension liability also increases in companies that report in accordance with IAS 19, but the operating result is not affected in that case because the effect is instead included in other comprehensive income (OCI).

Our online service provides an updated forecast that takes the indexation into consideration. 

After 25 January 2024, you can also run an analysis to see how much your pension liability is increasing due to inflation. You can do the analysis when logged in to our online service for companies under the heading Pension Administration, ITP 2 and then select Analysis. The entries for the inflation indexation are called Indexation of accrued pension rights (active, disability, paid-up) and Indexation of pension supplements (retirement pensioners).

Please get in touch with your contact person if you have further questions

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