Receiving disability pension benefits

Disposable income and compensation rate when drawing disability pension.

Comparing income groups

Disability pension is calculated for a single person aged 50 having never been at the labour market (0 per cent of AW) or been at the labour market for at least 25 years. The latter is calculated given four different previous wage levels: 50, 75, 100 and 125 per cent of AW.

We compare the compensation rates as percentages of previous income from work. In Denmark, Faroe Islands, and Iceland the disability pension is independent of any previous income. However, supplementary benefits are payable from agreement-based pension schemes, which have not been included in the calculation. In the other countries, disability pensions are calculated based on previous income from work. Norway and Sweden place an upper limit on the disability pension, but Finland does not. In Norway and Sweden, the limit is AW 100, while in Finland it is above AW 125.

The increase in the compensation rate from 2017 to 2018 for Denmark is caused by a change in the calculation method of the supplementary private pension payments, which is now based on the distribution for 50-year-olds and not the whole group of early retirees. This means that the gross income of early retirees with income from earlier employment is higher based on the new calculation method.

Comparing compensation rate

In the figure we show the development of the compensation rate for those who earned 75 per cent of AW in recent years.

The compensation rate in the Faroe Islands has been decreasing since 2011 because pensions are not regulated with wage developments. In Sweden the compensation rate has dropped by approximately 5 percentage points from the 2007 level, while it has increased by almost as much in Finland. The compensation rates have been stable in Norway.

Please refer to the section on Disability benefits, for more specific information on rules in each of the Nordic countries.