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 and the Faroe Islands, 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 Denmark it is above AW 125.

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 is more than 100 per cent because the benefit is independent of previous income. 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 and Denmark.

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 is more than 100 per cent because the benefit is independent of previous income. 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 and Denmark.