Disability pension in the Nordic countries
The disability pension schemes in the Nordic countries makes it possible for people with reduced working capacity to have a permanent income. This part of the social protection policies in the Nordic countries typically target the adult population from 18 years of age. People who receive disability pension in the Nordic countries will often continue to do so until they reach the age for receiving old age pension.
The reasons for applying for disability pension can be very different and the disability schemes in the Nordic countries demonstrate differences in the way that people with disabilities are supported. In most cases the ability to work is assessed as part of the application process. In some of the Nordic countries the amount of disability pension receivable is therefore set according to the residual ability to work.
Also, the length of residence, activity on the labour market or citizenship are considered relevant when people are deem entitled to disability pension in the Nordic countries.
Overview of national disability pension structures
All Nordic countries have different structures on the disability pension schemes. In the document below you will find a table with a list of comparisons of key features on this part of the social protection policies in the Nordic countries.
The table cover rules from the year 2022 on the foundations for granting disability pension and supplementary pensions.
Overview of national rules applying to disability pension in Nordic countries
The Nordic countries have different names applying to this type of social protection. The names indicate how the country help and support recipients. Following this the rules and regulations are different across the Nordic countries. In the document below you will find a table with a list of comparisons of key features on this part of the social protection policies in the Nordic countries.
The table cover rules from the year 2022 on i.e., relevant age group, level of work incapacity, size of pensions and pension indexation. Variations within each country is listed in footnotes.
The disability pension (Førtidspension) may be granted to any person whose age is above 18 and below the retirement age, and whose ability to work is permanently reduced to an extent so that person is unable to ensure their subsistence.
However, people under the age of 40 have restricted access to the disability pension system. Instead, they are required to participate in a resource clarification process, which consists of holistically oriented activities intended to develop their working capacity. In cases where it is evident that the individual in question cannot return to work, the municipal administration may still award a disability pension.
The disability pension (Fyritíðarpensjón) is divided into three different levels according to the pensioner’s ability to work. Highest level is awarded pensioners with no workability. The pension consists of a basic amount, a supplement, and a disability benefit. The basic amount and disability benefit is tax-free. Furthermore, disability pensioners are subject to tax-reduction.
The disability pension is adjusted in relation to pensioner’s own income from work and pension funds.
The disability pension (Työkyvyttömyyseläke) in earning-related pension system consists of the pension accrued during the work history and a projected pension component that is calculated from the beginning of the year of the pension contingency to the age group’s retirement age. As a rule, the projected pension component is determined based the average earnings for five years before disability pension. Disability pension grated to a person for a limited period is called rehabilitation benefit. Disability pension may be granted in full or partial depending on the remaining working capacity.
If a person has no working history or it is short, he receives disability pension from the national pension system.
The disability pension (örorkulífeyrir and tekjutrygging) consists of a basic amount and an age-dependent benefit addition. The age-dependent benefit is an addition to the disability benefit and is gradually reduced the older the pensioners are when they are granted disability benefit. Those aged 24 or younger when they are granted a disability pension receive 100 per cent of the amount of the basic pension, and those who are aged 61 to 66 when they are granted disability benefit receive 2.5 per cent of the amount of basic pension. Disability pensioners who live alone in a flat may also be granted special benefit called “heimilisuppbót”. A special benefit can be made available to those with little or none other income.
Disability benefit (Uføretrygd) can be granted to persons whose income capacity is permanently reduced by at least 50 per cent due to permanent illness, injury, or deformity. The medical condition must be the main cause of the incapacity or reduction of the income capacity. For persons receiving Work Assessment Allowance when the claim for disability benefit is made, it is sufficient that the income capacity is permanently reduced by 40 per cent. If due to a work-related injury or sickness, it is sufficient that the income capacity is permanently reduced by 30 per cent. The disability benefit is calculated based on the average pensionable income of the best three of the previous five years before the onset of disability. Income exceeding 6 times the basic amount (Grunnbeløpet) is not considered. The disability benefit rate per year is 66 per cent of the calculation basis. Persons with low or no previous income are given a yearly minimum.
The recipient of a full disability benefit may have an annual income from work of up to 40 per cent of the basic amount without any reduction of the benefit. A recipient of a graded disability benefit may have an income from work up to 40 per cent of the basic amount in addition to the income corresponding to her/his remaining capacity, without any reduction of the benefit. With higher income, the benefit will be reduced by a portion of the exceeding income. The degree of disability is not recalculated. Disability benefit is subject to taxation.
The sickness compensation and activity compensation (Sjukersättning and Aktivitetsersättning) provide financial security in the event of a long-term reduction in work capacity. People aged 19–65 may receive the sickness compensation if their working capacity is permanently reduced due to chronic illness or disability. Activity compensation is awarded to people aged 19–29 whose work capacity has been reduced, due to illness or disability, by at least one quarter for at least one year. This benefit is always temporary.
Activity compensation and sickness compensation can be paid as full, three-quarter, half or one-quarter benefits. Activity compensation due to extended schooling is always paid as a full benefit. There is an income-related benefit and a guaranteed benefit. The income related benefit is linked to income from work. Guarantee benefit is available to people with
little or no previous work income.