Occupational
pensions
Retirement
pension
Retirement pension is the core of Skandia's occupational pensions pro-gramme. The amount of your retire-ment pension depends on the amount of premiums paid in, the growth in value of your savings, and the length of time your benefits will be paid out.
Family and survivors'
pension
A retirement pension can be comple-mented with survivors' pension in the form of repayment protection, a family pension, or strict survivors' pension. This entails that the accumulated sav-ings or insurance protection will be paid out as survivors' benefits upon the death of the insured.
Disability insurance
Disability insurance pays benefits for loss of income in the event of an inca-pacity for work caused by an illness or accidental injury.
Company-owned
endowment insurance
A company-owned endowment insur-ance policy can be purchased by an employer as security for a direct pen-sion obligation to an employee.
Privately owned
endowment insurance
As a complement to company-owned insurance, privately owned endow-ment insurance can also be purchased. Anyone can be named as a beneficiary in a privately owned endowment insur-ance policy.
Waiver-of-premium
insurance
Waiver-of-premium insurance is an optional form of cover entailing that Skandia will pay all or part of the insured's premiums after a certain, contracted period if the insured suffers from an incapacity for work due to an illness or accidental injury.
Interim solution
Under an interim solution, certain default insurance components come into force immediately when a company applies for an occupational pension plan for its employees with Skandia. The interim solution applies for a limited period of time, until the employees have made their personal insurance choices within the occupational pensions programme.
Complementary
insurance
More information about the following types of insurance is provided in sepa-rate brochures.
Skandia's occupational
pensions pro¯ramme
This brochure provides a general description of the various forms of insurance in Skandia's occupational pensions
pro-gramme, which is directed at all types of companies and includes modern insurance solutions for business owners as
well as employees. Below is a brief summary of what is included. The various components are explained in more detail
further down in this brochure. Skandia's occupational pensions programme is highly flexible, making it possible to
cus-tom-tailor insurance solutions for groups of employees as well as for individuals. Skandia offers various forms of asset
management for your pension savings, and you can conveniently switch management forms for future savings. Within
Skandia you can also switch management forms for capital that has already been built up, through a policy transfer.
The insurance is contracted through Skandia Link and Skandia Liv, jointly referred to herein as Skandia.
The programme includes the following types of insurance:
• Company-owned occupational pension insurance • Pension insurance for business owners • Company-owned
endowment insurance as security for direct pension obligations • Privately owned endowment insurance
Healthcare insurance
Healthcare insurance is directed at companies that put a premium on prompt, first-rate private healthcare for their employees as a complement to the national healthcare system. Skandia has agreements with the lead-ing private hospitals in Scandinavia.
Group insurance
Group insurance is directed at compa-nies with at least ten employees and offers complementary, attractively priced insurance protection for their employees. Life assurance, disability capital insurance, accident insurance and child insurance are examples of insurance components that can be included in a group insurance plan.
Advanta¯es of our
occupational
pen-sions pro¯ramme
Good for you as a policyholder and employer• Convenient insurance solutions • Simple administration
• Extensive experience
Good for you as an insured and employee
• Need-based insurance solutions • Security for you and your family • Flexible management forms
Skandia's occupational pensions programme features a number of insurance components that can be combined and
complement each other in various ways.
When insurance is purchased from Skandia, a contract is entered into between the policyholder and Skandia. This contract is verified by special contract documents that are sent to the policyholder and the insured. By insured is meant the person whose life the insurance covers.
• For occupational pension insur-ance policies and company-owned endowment insurance purchased as security for a direct pension obliga-tion, the employer is the policy-holder.
• For private pension insurance, the business owner is the policyholder. • For privately owned endowment
insurance, ordinarily the insured is the policyholder.
In an occupational pension plan, the insured is to be regarded as the poli-cyholder in accordance with the rules of the Insurance Contracts Act. This applies unless otherwise stipulated in the contract with respect to: • the right to information
• the ability to name beneficiaries for survivors' protection
• fund selection
• transfers to a new employer when employment ends
• the right to insurance benefits
Health declaration
For certain types of insurance, approv-al of a heapprov-alth declaration is required in order for the insurance to be granted. If a health declaration leads to insurance being granted at a higher premium or with certain exclusions, Skandia's liability does not take effect until Skandia has informed about the higher premium and the policyholder has accepted. A health declaration can also be required if a change in the insurance contract is requested later during the insurance period. In some cases, a simplified health declaration is used, entailing that the policyholder or insured certifies that he/she is "fully fit for work" in accordance with the definition used at any time by Skandia.
False information
It is important that the questions in the health declaration are answered completely and correctly. False or incomplete information could render the insurance invalid.
The insurance contract regulates, among other things, when premiums are to be paid and how benefits are paid out and to whom.
Skandia adheres to the actuarial guidelines and actuarial computation bases that have been drawn up in accordance with the Insurance Business Act. The various forms of insurance are also governed by the Insurance Contracts Act and Swedish law in general. The Swedish Financial Supervisory Authority is the regulatory authority that conducts oversight of Skandia's business. Skandia's handling of personal data, cancellation rights, its Customer Satisfaction Guarantee and how any complaints are handled are described toward the end of this brochure.
When Skandia's
liability takes effect
Skandia's liability takes effect the day after the insurance application has been received by Skandia, under the condition that the application docu-ments are complete and it is not stated that the insurance shall come into force at a later date. If the premiums are invested in unit linked management with Skandia Link, Skandia's liability takes effect when the premiums have been received by Skandia.
The insurance
contract
Defined contribution
insurance
For defined contribution insurance, the policyholder determines how large the premium, or contribution to the insurance, will be. The premium can be paid in lump-sum or through periodic payments. For example, the premium can be based on the employee's salary, so it is important that Skandia is always informed about changes that affect the insurance. Every premium that is paid in builds up a benefit that is based on the computation assumptions that apply for the insurance at the time of each premium payment. If you choose GarantiPensionPlus with Skandia Liv, the higher amount of the basic guaran-tee or the enhanced guaranguaran-tee will be paid out. For traditional life manage-ment with Skandia Liv, the attained benefit is guaranteed. For unit linked management with Skandia Link, the benefit is based on the performance of the underlying funds.
Defined benefit
insurance
For defined benefit insurance, the policyholder purchases insurance with Skandia Liv that pays a set level of benefits during the disbursement peri-od. For example, the benefit can be based on a certain percentage of the employee's salary. If the employee's salary changes, then this affects the size of the premium, so it is important that Skandia is always informed about
The policy's
¯uaranteed value with
Skandia Liv
For insurance that includes a savings element, the policy's guaranteed insurance amount on every contracted disbursement occasion is based on accumulated paid-in premiums less fees. If premium payments are discon-tinued prematurely, the guaranteed insurance amount will be adjusted downward. This lower insurance amount is called the paid-up amount. If the policy has no guaranteed value when premium payments were dis-continued, then the policy becomes invalid.
The policy's fund value
with Skandia Link
The fund value is built up of invested amounts, that is, paid-in premiums and the change in value of the underlying funds. The fund value is also affected by taxes and fees that are charged to cover operating expenses. The fees consist of two parts – a fixed fee that is charged once a year, and a variable fee that is charged once a month. These fees are deducted from the fund value. changes that affect the insurance.
Based on Skandia Liv's computation assumptions, a premium is deter-mined. The computation assumptions may change during the term of the insurance.
Calculation of
premiums
Premiums are calculated after tak-ing into account assumptions about interest, mortality, overheads and tax. Overheads are costs for sales and administration. Tax consists of the policyholder tax or income tax that Skandia is obligated to pay for the insurance. Premiums for disability and waiver-of-premium insurance are calculated primarily on the basis of morbidity assumptions.
Payment of premiums
How and when premiums are to be paid is determined by the contract between Skandia and the policyholder. Premiums can be paid periodically as invoiced or via direct debit ("autogi-ro"). For insurance that will begin pay-ing benefits immediately, the premium must be paid in lump sum. If premiums are to be paid at the policyholder's discretion and in any amount, a pen-sion account will be opened.
Premiums and
policy value
Pension and
endowment insurance
Pension and endowment insurance dif-fer from each other primarily in terms of taxation. For pension insurance, premiums are deductible within certain limits, and amounts paid out are sub-ject to income tax. The insurance must also meet certain other requirements in accordance with the Income Tax Act. For endowment insurance, premi-ums are not deductible, but amounts paid out are exempt from income tax.
Beneficiaries
The insurance terms and conditions include a general beneficiary clause that specifies which person or persons are to receive benefits from the insur-ance. The policyholder, or in certain cases the insured, can change the gen-eral beneficiary clause in writing. Possible beneficiaries for a pension insurance plan with survivors' protec-tion are the insured's spouse/cohabit-ant or previous spouse/cohabitspouse/cohabit-ant and children of either of them. By children is also meant adopted children, step-children and foster step-children, but not
Insurance solutions
children's heirs. For company-owned occupational pension insurance, the insured is always the beneficiary of retirement pension benefits.
For privately owned endowment insur-ance, anyone can be named as a bene-ficiary.
Endowment insurance that is owned by a company has no beneficiary clause, but is instead paid out to the policyholder in accordance with an agreement signed upon purchase of the insurance.
Insurance protection
Pension insurance
Retirement pension
A retirement pension is built up through savings paid in through insurance premi-ums. Benefits are paid out as long as the insured remains alive or during a specif-ic, set period of time. When the insured dies, payments cease. The value of the insurance then accrues to the insur-ance collective if the insurinsur-ance was not combined with repayment protection, survivors' pension or family pension.
Repayment protection
Repayment protection is based on the insurance capital at the date of the insured's death. This usually applies prior to the age of retirement, but depending on the structure, it can also apply during the actual disbursement period. The repayment protection is paid out to the insured's survivor(s) in accordance with the beneficiary clause. Benefits must be paid out for a minimum of five years, in accordance with the rules of the Income Tax Act.
Family or survivors' pension
A family or survivors' pension is insur-ance that gives the insured's survivors financial protection. The insurance protection is structured according to the insured's needs, applicable rules and Skandia's product offer. Upon the death of the insured, the pension benefits are paid out to the person or persons named as beneficiaries. Both family and survivors' pension benefits must be paid out for a minimum of five years, in accordance with the rules of the Income Tax Act.
Disability pension
Disability insurance is purchased to pro-tect the insured against loss of income due to an incapacity for work if he or she suffers from an illness or accidental inju-ry and can no longer work as previously. The insurance benefits correspond to the portion of salary that is not compen-sated by the national insurance system.
holder upon the death of the insured, provided that a coinsured is alive. A coinsured is one or more persons, other than the insured, for whose life the insurance applies.
Waiver-of-premium
insurance
Waiver-of-premium insurance is an add-on insurance for both pension and endowment insurance. If the insured suffers from an incapacity for work due to an illness or accidental injury, then Skandia will pay all or part of the premiums for the basic insurance cover during the contracted insurance term. How much Skandia pays depends on the degree of the insured's incapacity for work. The insurance remains in force at the latest until the insured turns 65.
Limited insurance cover
Skandia has limited liability for disabil-ity benefits and waiver-of-premium protection for a period of 24 months from when the insurance first came into force. This limit applies if the insured suffers from an incapacity for work due to depression or a stress-related condition, age- or wear-stress-related condition of the back, joints and mus-cles, or fibromyalgia.
Risk insurance
Risk insurance is insurance that does not contain any savings element. For example, it can pay a set level of bene-fits upon the death of the insured. Dis-ability and waiver-of-premium insur-ance are examples of risk insurinsur-ance. These forms of insurance do not apply for death, disability or waiver-of-pre-mium attributable to war or political disturbances. Nor do they apply if the insured is or has been active in particu-larly high-risk activities, in accordance with what is stipulated in the insurance terms and conditions.
Payment of disability insurance benefits cannot commence until the insured has been on sick leave for at least three months. Payments cease not later than when the insured reaches the con-tractual age under the plan. Disability insurance protection lapses if premium payments are discontinued.
Endowment insurance
Privately owned endowment insurance – death benefit
Privately owned endowment insurance does not include any savings element and can be purchased to supplement a pension insurance plan. The benefit is paid out in a lump sum that is deter-mined in the insurance contract to the appointed beneficiaries upon the death of the insured. The insurance applies only for death before a certain, contracted date. If the insured lives beyond the conclusion of the insur-ance term, the insurinsur-ance lapses with-out any payment of benefit.
Company-owned endowment insurance – Direct pension solution
Endowment insurance capital is built up through savings paid in through pension premiums. Benefits are paid out as long as the insured remains alive or during a specific, set period of time. When the insured dies, payments cease. The value of the insurance then accrues to the insurance collective if the insurance was not combined with survivors' pension.
If the survivors' protection is coupled with repayment protection, payment of benefits will be based on the value of the policy at the date of the death of the insured. Other survivors' pro-tection can be designed according to the policyholder's needs, applicable rules and Skandia's product offer. Survivors' protection is paid out dur-ing a contracted period to the
policy-Other content of the
insurance contract
Indexin¯
Certain types of insurance can include indexing for inflation protection. This means that the premiums and/or ben-efits increase according to an index or percentage that the policyholder can choose within certain limits.
Ri¯ht to increase cover
An insurance policy can include a right to increase the level of cover. This means that the policy's benefit or pre-mium can be raised to a certain extent, subject to completion of a simplified health declaration. The right to increase cover can be exercised, for example, when an employee's salary changes.Family option
An insurance policy can include a fam-ily option, entailing that the insured has the right, without requirement for a new health declaration and within certain limits, to expand the cover with survivors' protection or increase the level of existing survivors' protec-tion. In most cases, a requirement is that waiver-of-premium protection is included. A family option can be exer-cised within a certain period of time after the insured has become married, enters into a cohabitation relationship, or has children.
Ri¯ht to amend the
contract prior to
receivin¯ benefits
Before an insurance policy begins to pay benefits, there are certain oppor-tunities to make changes. The policy-holder or – for occupational pension insurance – the insured, can amend the insurance – sometimes without havingIn addition, in the event the collective funding ratio is low, Skandia Liv may apply a Market Value Adjustment of the insurance capital that corresponds to the deficit in collective funding, i.e., when the value of Skandia Liv's assets is less than the value of the cus-tomers' aggregate insurance capital.
Surrenders
An insurance policy may be sur-rendered under the condition that it is possible in view of the individual policy's design and the rules that apply under the Income Tax Act. For some types of insurance, a health declara-tion is required. Skandia charges fees for surrenders.
Skandia's ri¯ht to
chan¯e the insurance
terms and conditions
In the insurance terms and condi-tions, Skandia has retained the right to make changes in the insurance contract if needed due to the policy's design, for actuarial reasons or out of consideration for the insurance collec-tive. Disability or waiver-of-premium protection can also be cancelled for the same reason. Skandia informs the policyholder of any change or if any insurance has been cancelled. The change or cancellation applies from the coming premium period. Skandia also has the right to change or cancel the insurance pursuant to the rules that apply under the Insur-ance Contracts Act. This applies if the insured has provided false or incom-plete information that was significant when the insurance was granted, expanded or renewed.to complete a health declaration. For occupational pension insurance, the insured's survivors can defer payment of benefits or change the duration of the disbursement period upon the death of the insured, provided that the policy has survivors' protection. The change must be made before payment of benefits commences and must be in compliance with the Income Tax Act. Limitations may apply in view of the policy's design and Skandia's product offer at the time in question.
Transfers of pension
insurance
Insurance capital can be transferred to Skandia from another insurance company under the condition that the policy is covered by transfer rights. For all new pension insurance contracts with Skandia, it is possible to apply to transfer the insurance capital to another insurance company if permitted by the rules of the particular policy in question. During the first five years in disburse-ment, it is not possible to transfer the insurance capital. Both the policyholder and the insured must give their approval before a transfer can be made. Transfer may only be made of the entire policy value to a new pension insurance plan, with the same insured as previously. It is important to keep in mind that it is not possible to transfer the actual insur-ance solution, but only the capital. For certain policies, a health declaration is required.
If risk protection has been purchased as a complement to the savings element, it may be forfeited in con-nection with a transfer. The actual insurance capital may also be affected by the fees that apply upon transfer.
to Sweden or other country than the aforementioned has been received by Skandia. If the insured has the right to make fund switches for an occupa-tional pension plan, the policyholder who remains in Sweden can rescind the right to make fund switches as long as the insured resides in one of the afore-mentioned countries.
an opportunity to decide which fund allocation shall apply as long as he or she resides in the country in question. In cases where no agreement has been reached on fund allocation, the exist-ing insurance capital will be placed in a fund determined by Skandia Link with low or medium risk. The renewed right to make fund switches applies as soon as an application for repatriation
Expatriates
A person who is entitled to make fund switches and who intends to establish residence in the USA, Japan, Australia or Canada is obligated to inform Skan-dia prior to moving abroad.
After moving abroad, the right to make fund switches ceases immediately. Pri-or to moving abroad, the person enti-tled to make fund switches will have
GarantiPension Plus
in Skandia Liv
Skandia Liv has developed an offering for policyholders who have chosen GarantiPension Plus as their occupa-tional pension solution. It combines the best of two savings forms, giving you the guarantee of traditional pension insurance along with the opportunity for high returns provided by investment in equities.
Advanta¯es of
GarantiPension Plus
Adapted to your ageThrough GarantiPension Plus, we invest your money according to your age. If you are young, a larger alloca-tion will be made to equities, which normally generate higher returns over time. As you approach retirement age, the share of equities is scaled back in favour of more secure investments, to reduce the risk in your savings.
Basic ¯uarantee
As a basic measure of security for you, GarantiPension Plus features a money-back guarantee. This means that when you turn 65, you are guaranteed that at least the sum of your pension contribu-tions (premiums less costs and fees) will be set aside for payment of your pension benefits.
Here's how the
¯uarantees work
Enhanced ¯uarantee
when you need it most
GarantiPension Plus contains an enhanced guarantee that ensures growth in value of your pension capital during the savings period. The higher the growth in value, the higher your guarantee amount when you turn 65. If you choose GarantiPension Plus before turning 55, you will be guaran-teed at least 90 % of your total pension capital at 65. If you choose GarantiPen-sion Plus after turning 55, the enhanced guarantee will be slightly lower. The enhanced guarantee is designed to pre-vent your pension capital from losing value during declines in the financial markets. The insurance amount is cal-culated using the higher of the base guarantee and the enhanced guarantee.
Payment of benefits
You decide yourself if you want to receive lifetime benefits or payment during a set period (but a minimum of five years). You can begin drawing pension benefits from 55 years of age.
Guarantees
The guarantees offered in GarantiPen-sion Plus apply under the condition that payment of benefits begins when you turn 65.
Forms of mana¯ement for
your occupational pension
25 30 35 40 45 50 55 60 65 Age SEK 3 000 000 2 500 000 2 000 000 1 500 000 1 000 000 500 000 0
Total pension capital = total contributions plus growth in value.
Enhanced guarantee – you are guaranteed at least 90 % of your total pension capital when you turn 65. Basic guarantee – at 65 years you are guaranteed that at least the sum of your paid-in savings premiums will be set aside for payment of your pension benefits
This example represents neither a forecast nor an obligation
By having your occupational pension with Skandia, you have the best prospects of receiving
a high return on your savings. With us you can choose from some of the market's strongest
offerings in traditional life management and funds. An occupational pension plan can have the
same content and same premium regardless of whether it is managed through our new offering,
which we call GarantiPension Plus, in traditional life management, or in unit linked
manage-ment. The difference lies in how the pension capital is built up. Here you can read about the
advantages of the investment opportunities you have
Real estate 5%
Equities 70% Fixed-income
securities 25%
* Management of the pension capital is adjusted to the prevailing risk and market situation.
Approximate allocation of
The value that is created in a life assur-ance policy with traditional life man-agement is called the insurance capi-tal. The insurance capital shows the policy's total value and is often greater than the policy's guaranteed value, that is, the value that is built up over time to form the contracted insurance amount. The difference between the insurance capital and the guaranteed value is called the surplus. The surplus forms the basis of bonuses paid upon disbursement and is not guaranteed.
About the surplus and
bonuses
A surplus can arise in Skandia Liv's business if the result of asset manage-ment for the insurance is more favour-able than what Skandia Liv anticipates when calculating insurance amounts and premiums.
The result can be more favourable: • if the actual return on the assets is
higher than anticipated,
• if the insureds' lifetime deviates from the assumption,
• if fewer insureds than calculated are ill and do not use their waiver-of-premium insurance, or
• if the costs for running the business are lower than assumptions. If a surplus arises, it is smoothed over time and then allocated among the various insurance policies through the bonus rate. This allocation is done in different ways, depending on the type of insurance under management. For
Performance of the
insurance capital
The insurance capital is affected dur-ing the course of a year by the follow-ing items:
This is how things look as long as no death occurs. In the event of death, the insurance capital is affected imme-diately.
Return
The return that Skandia Liv pays on the insurance capital is dependent on the change in value of the company's assets and on Skandia Liv's asset man-agement costs.
Risk revenue
Assume that a policy is a retirement pension plan without survivors' protec-tion. Since such insurance would lapse without payment of any benefits in the event of death, the policyholder runs a risk of losing the insurance capital. As compensation for this risk, the insur-ance receives risk revenue. This is cal-culated taking into account the degree of risk and probability of death, which in turn depend on age and gender.
Risk charges
If a death benefit is to be paid out that is greater than the insurance capital, then Skandia Liv pays the difference insurance with ordinary, traditional life
management, this smoothing is done over several years. For GarantiPension Plus with traditional life management, smoothing is done in part monthly and the rest over several years.
The surplus is allocated to every policy based on how much they have contributed to the total surplus that has accumulated in Skandia Liv. The surplus can decrease if Skandia Liv's business generates a negative result. This means that Skandia Liv cannot make any guarantees on the surplus. When the time comes for payment of benefits, any accumulated surplus is allocated to the policies as a supple-ment to the insurance amount. This supplement is not guaranteed and can decrease if Skandia Liv believes that the insurance capital would otherwise not be sufficient to cover future ben-efits. However, the benefits can never fall below the contracted insurance amount. Allocation of the surplus is smoothed over time so that benefits do not need to be reduced in connec-tion with small declines in Skandia Liv's operating result.
Skandia Liv has a funding reserve that may be used to cover future operat-ing losses. Accordoperat-ing to Skandia Liv's Articles of Association, the money in the funding reserve may also be used to pay bonuses to the policyholders. The Articles of Association may be amended, but only under the condition that such amendment is compatible with insurance contracts in force.
Traditional life
mana¯ement with
Skandia Liv
Plus items • Paid-in premiums • Return • Risk revenue Minus items • Payment of benefits from the insurance • Risk charges • Policyholder tax • Right to waiver ofpremium • Operating expenses
the highest possible return at a well-balanced level of risk.
Asset Liability Management (ALM)
Skandia Liv works actively with Asset Liability Management, which entails that the company's obligations are taken into account in the investment of assets. The aim is that the portfolio will generate a favourable return at the same time that future benefits can be secured. This analysis takes into account the age distribution among our policyholders, the starting date and duration of benefits, and the level of benefits, among other things. In addition, consideration is given to the rules that apply for traditional life management.
More information
For more information about Skandia Liv's asset management and current figures/key ratios, visit our website, at skandia.se/liv.
Mana¯ement of the
insurance capital
The goal of asset management is to achieve the highest possible return with a balanced measure of risk. Since life assurance savings are long-term, the asset management also has a long-term focus. This allows the asset management to disregard short-term movements in the financial markets.
Reference and target portfolios
A framework is in place as guidance for how investments are to be allocated in Skandia Liv's asset portfolio. The refer-ence portfolio shows the investment limits for fixed-income securities and equities, i.e., traditional asset classes that are easy to assess in the near term. The target portfolio is a modern outgrowth of the reference portfolio. It shows long-term targets for the management of alternative assets that are more difficult to assess in the near term, such as infrastructure and com-modities. Through this distinction, the asset management can more easily identify the optimal mix of asset classes in both the short and long term.
Diversification
Diversification, or the spread of investments across several asset class-es and markets, is very important for the total return. Skandia Liv's internal asset management is complemented by more than 50 external, carefully selected asset management partners around the world. Active asset man-agement entails a continuous process of considerations and decisions that are closely monitored and controlled. The goal is always to offer security and between the death benefit and the
insurance capital. Skandia Liv assesses a risk charge for this risk, which takes into account the degree of risk and probability of death, which in turn depend on age and gender.
Policyholder tax
Each year Skandia Liv pays a so-called policyholder tax, which is calculated according to a taxable base that is obtained by multiplying the company's assets at the start of the year by the average government lending rate for the preceding year. On this base, a tax charge of 27 % is currently assessed for endowment insurance and 15 % for pension insurance. The annual state-ment of policy shows what impact this has on the individual insurance policies.
Right to waiver of premium
In most cases, waiver-of-premium insurance can be added for a fee.
Operating expenses
Skandia Liv charges a fee to cover its costs for sales and administration of insurance contracts. This can be done in part through a percentage deduction from the premium and in part through a percentage deduction from the insurance capital, or through a one-time charge. Information on fees for an individual policy can be obtained through a quotation and product flier or from an insurance adviser. Asset management charges are not included in operating expens-es, but are deducted from the prelimi-nary allocation of the surplus.
Fundin¯ policy
Purpose of funding policy
When a traditional life assurance com-pany like Skandia Liv allocates the surplus to its customers, normally this is done with a smoothing over time. The collective funding ratio shows the relationship between the value of the company's assets and the aggregate value of the customers' insurance capital. The collective funding ratio should be neither too high nor too low. The purpose of the funding policy is to indicate how high the collective fund-ing ratio should be and which measures should be taken to keep it within the specified limits.
Skandia Liv's investment return is the factor that has the greatest impact on collective funding. The bonus rate is the most important tool for regulating the collective funding ratio. The fund-ing policy is therefore a policy for how we determine the level of the bonus rate.
Targets and limits for collective funding
Skandia Liv strives to maintain col-lective funding that corresponds to 105 % of the policyholders' total
insur-soon as possible. If the collective fund-ing ratio is lower than 100 % for more than 36 months, then a reallocation must be made to bring the ratio back up to 105 %.
Return on the insurance capital
The return can be calculated based on the current level of interest rates and the current collective funding ratio. The level of collective funding indirectly measures how much of the investment return has not yet been allocated to the policyholders. The surplus or deficit collective fund-ing that exists is apportioned via the bonus rate with an equalisation over three years.
An extra cautionary measure is taken in times when the investment return has been negative for a long period of time, i.e., 12 months. In such case, the bonus rate is lowered by an extra large amount. The opposite applies when the collective funding ratio exceeds 110 %. Then the bonus rate is raised by an extra large amount.
ance capital. This provides a buffer for declines in the stock market, for example. The collective funding ratio should lie within an interval of 95 %–115 %. When it moves outside this interval, action is taken to return it to within this interval. This is done to quickly establish a balance between the value of the assets and the policy-holders' total insurance capital.
Measures to adjust collective funding
If the collective funding ratio devi-ates from the target funding level, an adjustment is made primarily by raising or lowering the bonus rate. If the col-lective funding ratio exceeds 115 %, we raise the individuals' insurance capital through a one-time measure (an allo-cation). If it falls below 95 %, then we lower the individuals' insurance capital through an opposite one-time meas-ure (a reallocation). If the deviation remains, a further allocation or reallo-cation is to be made within 12 months from the date on which the deviation arose. If the deviation is greater than five percentage points, the allocation/ reallocation must be carried out as
80% 90% 100% 110% 120% 130%
Collective funding ratio
Examples of how the collective funding policy works
No allocation when CFR temporarily exceeds 115%
Allocation as soon as possible
when CFR exceeds 120% Allocation when CFR exceeds 115% for a long time
Bonus rate is adjusted Reallocation when CFR
is below 95% for a long time Reallocation as soon as possible
when CFR falls below 90% No reallocation when CFR
temporarily falls below 95%
An occupational pension plan can have the same content and same premium regardless of whether it has traditional life management or unit linked man-agement. The difference lies in how the pension capital is built up. Skandia Link offers occupational pen-sion insurance with unit linked manage-ment, which entails that the insurance capital is dependent on the return of the underlying mutual funds. In our offering we have gathered a broad selection of funds that benefit from developments in markets around the world. We work according to a thorough selection process in which only the funds and fund companies that live up to our high standards are selected. The selection process is continuously ongoing, and we eliminate funds from our offering that do not meet our performance targets. In this way we strive to make it easy for you to choose – and your pension capi-tal has good opportunities to grow.
Switchin¯ funds
Normally it is the owner of the policy who has the right to make fund switch-es. For occupational pension plans, it is usually the employer who owns the policy. Under an agreement with the employer, the employee is usually given this right and thereby becomes the person entitled to make fund switches. If the employee wants to allow another person to handle fund switches, then Skandia must be notified of this in writ-ing. The person who is entitled to make fund switches can do so at any time, free of charge. The insured bears the risk for any changes in value.
For purchases and sales of funds quoted in foreign currency, a foreign exchange transaction is made. Based on the exchange rate, a surcharge of at present 0.25 % is assessed to calculate the
the degree of risk and probability of death, which in turn depend on age and gender. The policy is credited with risk revenue twice a year. During the disbursement period, the insurance is credited with risk revenue every time payment is made from the policy.
Risk charges
If a death benefit is to be paid out that is greater than the insurance capital, then Skandia pays the difference between the death benefit and the insurance capital. Skandia assesses a risk charge for this risk twice a year, which takes into account the degree of risk and probabili-ty of death, which in turn depend on age and gender. The risk charge is deducted from the policy's fund value.
Overheads
Skandia charges a fee to cover its costs for sales and administration of insur-ance contracts. This fee consists of two parts – a fixed and a variable portion. The fee is charged by selling fund units. The size of this charge is stated in the information that Skandia sends out at the start of the year.
Right to waiver of premium
In most cases, waiver-of-premium insur-ance can be added for a fee.
Policyholder tax
Each year Skandia Liv pays a so-called policyholder tax, which is calculated according to a taxable base that is obtained by multiplying the fund value at the start of the year by the average government lending rate for the pre-ceding year. On his base, a tax charge of 27 % is currently assessed for endow-ment insurance and 15 % for pension insurance. The tax is deducted from the fund capital at the start of the year. The amount of this tax for the individu-al insurance policies is shown in yearly information that Skandia sends out. fund's buying price, and a deduction of
at present 0.25 % is charged to calculate the fund's selling price in Swedish kro-nor. The surcharge and deduction cover the risk and costs that Skandia has in connection with fund trading. The for-eign exchange transaction is handled by Skandia's finance department.
Performance of the
insurance capital
The insurance capital, i.e., the fund value, reflects the value development of the selected funds. In addition, the insurance capital is affected during the course of the year by the following items: Plus items • Paid-in premiums • Risk revenue Minus items • Risk charges • Overheads • Disbursements
from the insurance • Right to waiver of
premium • Policyholder tax
Paid-in premiums
Paid-in premiums are the money that the employer has paid toward the insurance. Premiums are invested, after deducting any investment charges, in the selected funds. If no funds have been selected or the choice is unclear, then the premium is invested in a fund determined by Skandia Link with low or medium risk until it is clear for Skan-dia Link which fund selection applies.
Risk revenue
If the policy is for retirement pension without survivors' protection, then it lapses without payment of any bene-fits upon the death of the insured. The insured therefore runs a risk of losing the value that exists in the insurance, and as compensation for this risk, the insurance receives risk revenue. This is calculated taking into account
Unit linked mana¯ement
with Skandia Link
Pension insurance
The insurance must meet certain requirements in accordance with the Income Tax Act in order to be classi-fied as pension insurance. These can entail certain limitations to access to the insurance capital. Retirement pen-sion benefits cannot be paid out until the insured turns 55, and payments must be made for a minimum of five years, according to the income tax rules. The insurance cannot be sur-rendered or transferred, other than in certain specific cases. For example, in connection with a change of employ-ment, a transfer may be made from a previous employer to a new employ-er, or to the insured. The category of beneficiaries is limited, and the ben-efits must be paid out for a minimum of five years.Skandia's insurance contracts meet all requirements to be classified as pension insurance, which means that premiums are tax-deductible within certain limits. It also means that the person to whom the pension benefits are paid is obligated to pay income tax, and that the pension benefits must be declared as earned income. Employers who pay premiums for occupational pension insurance, and business owners who pay their own premiums towards pension insurance, pay a special payroll tax on the pre-mium.
Direct pension
An endowment insurance policy that includes a savings element can be purchased by an employer as security for a promise to pay a so-called direct pension. The employer then use the tax-exempt payments from the insur-ance to pay pension benefits to the former employee or his/ her survivors. As security, the policy is pledged to the employee, and upon his/her death to the survivors. Pension benefits paid out are subject to income tax for the beneficiary. When pension payments are made, the employer may deduct the amounts, but must also pay the special employers' payroll tax on the amount paid out.
Privately owned
endowment insurance
An endowment insurance policy that pays a set amount upon the death of the insured can be purchased by the insured as a complement to an occupa-tional pension plan or private pension insurance. The premium for the insur-ance is invoiced together with other premiums for pension solutions in Skandia's occupational pensions pro-gramme. This means that the premium for an employee's insurance is sent to the employer. If the employee then fails to pay for the premium through a net salary deduction, he/she will be taxed for the value of the premium.Deduction rules
Main rule for occupational pensions
Under the main rule in the Income Tax Act for occupational pension insur-ance, premiums corresponding to a maximum of 35 % of the employee's salary are tax-deductible. The ceiling amount for the deduction is 10 times the Price Base Amount. By salary is meant pensionable income according to a pension agreement during the current or preceding tax year.
Complementary rule for occupational pensions
For changes in a pension agree-ment, for a new pension agreement if employment ends prematurely, and when the employer's promise for pen-sion benefits is insufficiently secured, the so-called complementary rule of the Income Tax Act may be used. In such case, deduction is allowed or costs to achieve a certain, maximum level of retirement pension. For more information about the opportunities provided by the complementary rule, talk to a Skandia insurance adviser.
Business owners working in a sole proprietorship or partnership
For business owners working actively in a sole proprietorship or partnership, in addition to a standard deductible amount of SEK 12,000, pension pre-miums corresponding to 35 % of the person's income are tax-deductible, up to a ceiling of 10 times the Price Base Amount.
Endowment insurance
Endowment insurance premiums are not tax-deductible, and amounts paid out are not subject to income tax.Personal data provided to Skandia will be used by the company and other companies in the Skandia group to enable the companies to honour contracts entered into or obligations prescribed by law or other statutes. Normally such data is obtained directly from the registered person, however, it may also be obtained from employ-ers or other parties. The data may be updated through external registers, such as Spar.
The data may also be used for market analyses, statistics, and to evaluate products and services. In addition, personal data may be used to inform about the Skandia group's services and products along with the
limita-of the Skandia group. These persons will only have access to the informa-tion to the extent needed to enable them to perform their duties. The company may record or in some other manner document individuals' com-munication with the company. According to the Personal Data Act (Personuppgiftslagen (1998:204)), every registered person has the right to receive information about and cor-rections made to personal data that is registered. Such requests are to be made in writing to Skandia, SE-106 55 Stockholm. Mark the envelope "Infor-mation on personal data".
tions that apply as per agreement. Personal data may – for the aforemen-tioned purposes – be provided to com-panies in the Skandia group and other companies that the Skandia group co-operates with in countries both in and outside of the EU and EEA. Persons who do not wish to receive addressed offers can contact the company's cus-tomer service centre and request an advertising block.
In its handling of personal data, the Skandia group will take great care to protect the personal integrity of the individuals concerned. Data will be made available only to persons who need to have access to such data to be able to perform their duties on behalf
Personal data act
Division of estate
The value of both pension insur-ance and endowment insurinsur-ance that is owned by the insured and which constitutes community property is included in the division of estate in connection with a divorce or during a marriage. The value of a company-owned occupational pension plan is normally not included in a division of estate for the insured. Pension insur-ance is never included in a division of estate upon the death of the insured or his/her spouse.
Information
The policyholder receives a confirma-tion of the insurance contract, yearly information about the value develop-ment, and information prior to and during the disbursement period. When an occupational pension policy is pur-chased, in most cases the insured is regarded as the policyholder, and thus the information is sent to the insured. The policyholder also receives a con-firmation of the contract for occupa-tional pension insurance. Skandia can also provide information via its online office at skandia.se.
Financial difficulty
An occupational pension plan that is owned by an employer is normally protected from the employer's credi-tors. Upon initial payment of benefits, the policy may be subject to distraint for the beneficiary's liabilities, how-ever, it may also be protected under the rules of the debt recovery code. If a pension or endowment insurance policy is owned by the insured, then it is protected from creditors depend-ing on whether it was distraint-free or subject to distraint in accordance with the Insurance Contracts Act. Even if the insurance is considered to be sub-ject to distraint, it may be protected by other legislation. A judgement is always made in the individual case at hand by the Swedish Enforcement Authority at the time in question.
Other important rules that
affect the insurance
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More information
about Skandia
Customer Satisfaction Guarantee
Upon purchasing a new insurance policy, the policyholder can take advantage of Skandia's Customer Sat-isfaction Guarantee. If Skandia is noti-fied in writing within 14 days from the day on which the insurance policy was received, the policyholder can cancel the contract and have all paid-in pre-miums repaid.
Your satisfaction is important for us!
If you feel that Skandia has acted wrongly, it is important that you con-tact Skandia as soon as possible to express your views. Skandia's Head of Complaints is responsible for respond-ing to complaints or makrespond-ing sure that they are addressed by the affected company in the Skandia group. The Head of Complaints is also respon-sible for ensuring that reviews are conducted in a uniform manner and
that justified complaints lead to a cor-rection. If you are not satisfied with the response from the Head of Com-plaints, you can turn to Skandia's Cus-tomer Ombudsman to have your case reviewed. The Customer Ombudsman has an independent and impartial posi-tion with respect to Skandia's organi-sation. Other instances for appeal are the National Board for Consumer Complaints (Allmänna reklamations-nämnden – ARN), which has a special department for insurance matters, and the Swedish Consumers Insurance Bureau (Konsumenternas försäkrings-byrå), which can also provide advice on insurance matters. Unresolved disputes may be resolved by a general court of law. Legal protection insurance, which is often included in home insurance, often covers attorney costs for such cases.
Contact Skandia
Skandia customer service
tel.: 0771-55 55 00 (domestic calls only)
Skandia head offices
Postal address: SE-106 55 Stockholm, Sweden tel.: +46-(0)8-788 10 00
skandia.se
Skandia's Complaints unit
Postal address: SE-106 55 Stockholm, Sweden tel.: +46-(0)8-788 44 85
fax: +46-(0)8-788 47 80
e-mail: [email protected]
Skandia's Customer Ombudsman
Postal address: SE-106 55 Stockholm, Sweden tel. +46-(0)8-788 43 30
fax: +46-(0)8-788 37 30
e-mail: [email protected]
Livförsäkringsaktiebolaget Skandia (publ)
Skandia Insurance Company Ltd (publ) Secondary name: Skandia Link
