Basic pension or guaranteed minimum pension to elderly people

All Nordic countries provide a basic- or guaranteed old age pension for people with citizenship or residence in the country. Though the rules seem similar, the structure of the old age pension schemes are quite different considering the size and value of the payable benefits from basic- or guaranteed minimum pension to elderly people.

Basic-, or guaranteed minimum pension

In all Nordic countries the rules for applying for basic- or guaranteed pension require a period of residence in the country. The number of years varies between 1 and 5 with 3 years in most cases. In Denmark and Sweden part of the residence period can be in an EU/EES country.

However, to acquire the full benefits from this old age pension scheme a period of 40 years residence is required in al Nordic countries. A shorter period will often enable a partial benefit, often measured equivalent to the period of residence.

The basic-, or guaranteed pension are not dependent on previous income in all but one of the Nordic countries. And in almost all the countries it is possible to postpone the application for old age pension. Though the rules are different, this gives the applicant an increased amount of pension benefits.

Only Sweden has an income dependant guaranteed pension.

In most countries the application of basic- or guaranteed old age pension also give access to supplements of different kind. These supplements can relate to situations of low income, support for heating, health, and personal necessities.

About employment-, earnings-related or supplementary pension schemes

This page only concerns the basic- or guaranteed minimum pension to elderly people. In some of the Nordic countries this part of the pension scheme is supplemented by pensions schemes that relate to employment or earnings from working life.

[See the section Employment earnings-related, special and partial old age pensions, for more specific information on the topic of employment-, earnings related, or supplementary pension for elderly people.]

The data presented in the graph is correlated with the PPP/Euro indicator to enhance the comparison of the average monthly benefits. 

Using the purchasing power parity (PPP/Euro) it is possible to compare the value of the amount more directly than using the national currency.

As expected, the graph on monthly income before tax shows an increase in the monthly income for all countries reporting data. This is due to regular increased benefits. However, the level of increase demonstrates changes across the past two decades that frequently must be related to specific increases in monthly benefits.

Denmark

The basic amount paid to all pension recipients is adjusted in relation to any income they receive from work. The ordinary pension supplement, in addition to the basic pension, is adjusted in relation to a pensioner’s own and any spouse’s total income. Health and heating allowances, as well as a personal supplement, may also be paid to pensioners with low incomes and high expenses. Pensioners with low incomes and a small amount of disposable capital may be awarded a supplementary pension allowance (known as the pensioner’s cheque), which is payable once a year in January.

Faroe Islands

A pension reform, which came into effect in 2020, means that there are different rules for people born before and after the turn of the year 1952/53 respectively. 

Born before 1953: The basic amount is not income-adjusted. The regular pension supplement is adjusted in relation to taxable income and earnings-related pension. Pensioners with no or a low income may be awarded an annual non-taxable supplement.

Born 1953 or later: The basic amount and pension supplement are income-adjusted. 

Regardless of other income all old age pensioners receive a basic amount from the labour-market pension scheme, and they also receive a tax-deduction. 

Finland

The basic pension, which is based solely on an earnings-related pension, has played a less substantial role since the reforms of 1996–2001. Following the Act on Guaranteed Pension, which entered into force on 1 March 2011, the guaranteed pension was only payable to those whose total other gross income from pensions was less than EUR 828 per month in 2020. The maximum guaranteed pension in 2020 was EUR 835 per month. Any other pensions received, either from Finland or abroad, affect the amount of the guaranteed pension, and are deducted at a rate of 100 per cent.

Iceland

The basic pension is adjusted according to special rules in relation to other taxable work-related income. An additional pension is also available, depending on the recipient’s other income. In addition, a household supplement may be granted depending on income and household status. Pensioners with little or no other income may be eligible for supplementary special pension, which is payable to those whose total gross income is under a certain amount. In 2016, this amount was ISK 246 902 per month for those who live alone, and ISK 212 776 per month for those who cohabit.

Norway

The guaranteed minimum pension consists of a minimum pension level, which is fixed at several different rates depending on marital status and the income of any spouse/cohabiting partner. If the pensioner has no or only a limited supplementary pension, a pension supplement is payable. The pension supplement corresponds to the difference between the minimum pension and the basic and employment pension. Under the new pension’s accrual system, the basic pension, employment pension and pension supplement are replaced by a guaranteed pension, i.e. a guaranteed minimum benefit. To qualify for a full pension, the recipient must have been resident in the country for 40 years between the ages of 16 and 66. Years of residence between the ages of 67 and 75 may also be counted if pension points were accrued.

Sweden

The guaranteed minimum pension is payable to those who have reached the age of 65 (66 from 2023) and have a low or no employment pension. From 2026, the age limit will gradually increase in line with increasing life expectancy. To be entitled to a guaranteed pension, the recipient must have lived or worked in Sweden for at least three years. If the person has lived or worked in the EU/EEA or Switzerland, those years can be combined with the time the person has lived in Sweden, but the person must have lived or worked in Sweden for at least one year. To qualify for a full guaranteed pension, the recipient must have been resident in Sweden, the EU/EEA or Switzerland for at least 40 years between the ages of 16 and up to the year before in which the person is entitled to a guaranteed pension. 

If the person has lived in Sweden, the EU/EEA or Switzerland for a shorter period, the guaranteed pension will be lower. If the recipient has income-based pensions such as an income pension, widow's pension or a foreign pension, the guaranteed pension is gradually reduced and is then completely terminated when the person reaches a certain level. The recipient´s marital status also affects the size of the guaranteed pension.

Overview of national rules on basic-, or old age pension in Nordic countries

The Nordic countries have very similar names for old age pension schemes. The names indicate either a pension schemes that relates to citizenship or being guaranteed a basic income in old age. In any case the rules are very similar and, in the document below you will find a large table with comparisons of key features policies on basic-, or old age pension in the Nordic countries.

The table cover rules from the year 2022 on i.e., relevant age group, basic conditions, size of pensions and pension indexation. Variations within each country is listed in footnotes.