New Challenges for the Pension System

The Swedish pension system faces several large challenges. An ageing population puts upward pressure on the retirement age. At the same time, the number of poor retired people is expected to increase. How can the pension system as a whole provide security for the individual and the right incentives for a longer working life?

The project takes an overall perspective of the pension system and deals with questions that concern both the occupational pension and the state pension.

Challenges for the Pension System

Both the state pension system and the occupational (employer funded) pension system have undergone reforms that have strengthened the relationship between pension and life income. The reforms have also lead to an increased possibility for individual choice. The pension system faces new challenges despite the implemented reforms.

A number of changes in the surrounding world will affect the functioning of the pension system. The increased average life expectancy will put downward pressure on the pension levels. The general pension system and the occupational pension systems interact with each other and with the tax and subsidy system as a whole. Changes in the pension levels might thus also have consequences far beyond the pension system. People have also become increasingly mobile across country borders. In contrast, the pensions systems might be said to be designed on the basis of the implicit assumption that future retired people have normally worked in Sweden during their whole working life.

Research questions

  • A longer working life would reduce the pressure on the future pension levels. The relationship between the pension system and the length of working life does, however, also work in the other direction. The pension system might affect the length of the working life. The relationship between the length of the working life and the pension system is an important question to analyze, in both directions.
  • More people, both native-born Swedes and immigrants, will have worked abroad during part of their working life. This means that the Swedish income-related pension will be lower for those individuals. In certain cases, but not always, this is compensated for by pensions from other countries. People who remain outside the Swedish labor market for long periods of time receive a low income-related-pension. Are there any reasons to consider changes in the pension system based on these situations?
  • In order to be politically stable, the pension system must be considered to be legitimate. What is required to guarantee the legitimacy of the pension system?

Further questions may be formulated during the course of the project.

Facts about the project

Conferences

25/4 2018 Reducing Health-Related Labor Force Exits Among Elderly Workers
8/6 2017 Payroll Taxes and Individual Social Security Charges in the Pension System
17/1 2017 The Payout Decision in the Swedish Occupational Pension System
14/11 2016 How to facilitate improved decisions when saving for retirement?
30/11 2015 Who takes the responsibility for the pension system to favour a longer working life?

Publications

On-going studies

  • Life Expectancy Forecasts in the Pension System, Yuwei Zhao de Gosson de Varennes and Edward Palmer. Planned publication June 2018.
  • The Swedish Occupational Pension System, Mikael Elinder and Johannes Hagen. Planned publication November 2018.

Funding and reference group

The reference group consists of Alecta, Nordea Liv & Pension, SEB, The Swedish Pension Agency, Folksam, Handelsbanken Liv, Insurance Sweden, SPV, AMF, SKL, Försäkringskassan, SPP and Sjunde AP-fonden.

Schedule, project management and contact details

The project started in 2016 and will be completed in 2018.

Research Director: Stefan Sandström, stefan.sandstrom@sns.se,
+46-8-507 025 64

Project Manager: Mikael Blomberg, mikael.blomberg@sns.se,
+46-8-507 025 60