European Trade Union Institute, ETUI.

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The state of pension reforms in Sweden

Characteristics of the Swedish pension system


  • The national retirement pension system consists of three tiers: a pay-as-you-go notional accounts system, a mandatory funded defined contribution pension and a defined benefit pension-income tested top-up (OECD 2015, “Pension at a glance 2015”).
  • The earning-related pension scheme is the main component of the state pension system. A pay-as-you-go-system to finance the scheme was introduced already in the late 1990s. It is based on a notional accounts system which takes into account life expectancy. At retirement, the accumulated notional capital is converted into an annuity. The retirement age is flexible and pension benefits can be claimed from the age of 61 at the earliest.
  • The premium pension is the funded part of the earnings-related old-age pension. About 2.5% of the income is deposited in individual pension accounts in the mandatory funded defined contribution system where insureds have a large choice of where these funds are invested.
  • The guarantee pension. Persons older than 65 with low or no earnings-related pension get guaranteed pension if they have at least 40 years of residency in Sweden. Shorter periods are reduced proportionally.
  • There are also possibilities for survivor´s pension, housing supplement for pensioners or income support for the elderly.
  • In addition to the national retirement pension, the large majority of those who work in Sweden (90% of the employees, according to OECD) also get occupational pension from their employer. This second pillar of pension benefits is determined by nationwide collective bargaining agreements. Employees automatically belong to an occupational pension scheme, given that the workplace is covered by a collective agreement.
  • On 1 January 2010, the Swedish Pensions Agency (Pensionsmyndigheten) took over the responsibility for all national pensions. The purpose was to simplify administration and make things easier for pension savers and pensioners. All the administration concerning the national pensions is since dealt with in one and the same place.
  • Some voluntary pensions also exist, but are not connected to the labour market and are of minor overall importance. People born between 1938 and 1953 are also entitled to supplementary pension as part of the national retirement pension.
  • Many may have also paid into a private pension.

Pension reform in Sweden

  • The ‘normal’ retirement age in Sweden is when a person attains age 65. It is, however, possible for an employee to choose to retire between age 61 and 67.
  • A recent proposal by the government is to increase this period from 63 to 69 years in 2019. The proposal is opposed by some trade unions – on the grounds that their members are barely able to work till 65 – and also by some employers’ associations – who resist the thought that employers should be obliged to let people maintain their job till the age of 69. A decision will be reached by the Swedish parliament in late 2016 or early 2017.