High risk of incorrect payment in connection with foreign income
A growing number of people in Sweden today receive income from abroad that affects payments from the social insurance system. The Swedish National Audit Office’s audit shows that there are deficiencies in several stages of the working methods, procedures and related controls, leading to a high risk of incorrect payments.
In many cases, the applicant’s right to benefits from the social insurance system is linked to their income. As international mobility increases, the relevance of foreign income has grown. In 2022, about one in five of all beneficiaries of the social insurance benefits examined had worked or lived abroad at some time.
The Swedish National Audit Office has examined the central government’s efforts to counteract incorrect benefit payments to individuals who receive income from abroad. Our audit shows that there are deficiencies in several stages, leading to a high risk of incorrect payments. Individuals who receive foreign income may thus be granted social insurance benefits at an excessive amount of compensation.
“One problem is that the Swedish Social Insurance Agency and the Swedish Pensions Agency mainly rely on the individual to report information about foreign income. In addition, few systematic subsequent verifications are made and almost no adjustments of granted compensation amounts,” says project leader Tina Malmberg.
Some of the shortcomings are due to the lack of legal conditions for an effective exchange of information, which means that the Swedish Tax Agency has not been able to systematically share information about foreign income with the Swedish Social Insurance Agency and the Swedish Pensions Agency.
The Swedish National Audit Office has compared the Swedish Tax Agency’s data on Nordic pensions in 2022 with the data held by the Swedish Social Insurance Agency and the Swedish Pensions Agency. This comparison shows that the Swedish Social Insurance Agency and the Swedish Pensions Agency had data available on about 80 000 people who received one of the reviewed benefits, but lacked data on about 12 500 people. For the guarantee pension, for example, this meant that about 2 200 people in total received excessive payments amounting to SEK 21 million that year.
“This estimate only applies to one of several reviewed benefits and is probably just the tip of the iceberg. Especially considering that problems of exchange of information on foreign income are greater related to countries outside the Nordic region,” says Auditor General Helena Lindberg.
When government agencies nevertheless carry out controls, they are often hampered by long response times from foreign institutions, even when the countries have an electronic exchange of information in place. Furthermore, the register data used by the Swedish Social Insurance Agency and Swedish Pensions Agency for their checks is neither comprehensive nor entirely reliable.
Swedish government agencies can also issue a recovery claim to paying institutions abroad, which means that the foreign institutions reimburse Sweden in the case of overpayment. However, due to high workloads, the Swedish Social Insurance Agency and Swedish Pensions Agency rarely have time to issue recovery claims in time. Moreover, in such cases, under the regulations it is not possible to demand the money back from the individual who received the payment.
Recommendations in brief
The Swedish National Audit Office recommends that the Government promote an automatic exchange of information with other countries and that the Swedish Tax Agency be entitled to systematically share relevant information with the Swedish Social Insurance Agency and the Swedish Pensions Agency.
Recommendations to the Swedish Social Insurance Agency and the Swedish Pensions Agency include increasing cooperation with other countries and collecting information on Nordic pensions and other foreign income for systematic subsequent verification.
About the audit
This audit covers sickness and activity compensation, the housing supplement to the sickness and activity compensation, the housing supplement and maintenance support for the elderly, guarantee pension, income pension supplement and certain survivors’ benefits. Costs for these benefits amounted to about SEK 97 billion in 2023.