Tax Regulations and Pensions

The same tax regulations apply, for the most part, to pension payments and wage payments. Nevertheless, there are a very few exceptions, especially regarding fringe benefits.

Most payments by far of social insurance are subject to taxation as well as withholding requirements. Payments from pension funds are taxable.

Personal exemption and tax-rate card

It is important for someone receiving payments from more than one wage payer, for example, a pension fund and the Social Insurance Administration, for a personal exemption and tax-rate card to be divided so that the personal exemption is fully utilized. Employees at the Social Insurance Administration calculate how it is best to divide a personal exemption and tax-rate card and can take care of sending the part of the card not utilized at the agency to one or more other wage payers.

Attention should be called to the fact that the Income Tax Act authorizes utilizing 100% of a spouse's personal exemption and tax-rate card. This applies, for example, if one of a couple gets payments at the same time from a pension fund and from the Social Insurance Administration, but the spouse receives no payments or lower payments. A surviving spouse can also utilize his or her spouse's personal exemption and tax-rate card for nine months after the spouse's death.

Tax concessions

A reduction of income tax can be applied for from the tax authorities, e.g., if a spouse's illness, accident or death entails substantial reduction of liquidity. A reduction must be applied for made from a tax director.