Group of European Pensioners from Savings Banks and Financial Institutions


Index of documents > Euromeetings Magazine > Euromeetings Number 9


To get all statements I could about the new pension system in Sweden I have contacted the two major authorities, National Social Insurance Board (RFV) and Premium Pension Authority (PPM). I have also received a lot of material from the Swedish pension expert, KG Scherman, who is a former DG for RFV in  Sweden and is currently a member of the pension policy group in AGE. I will include some comments from him (AGE) when I come to the end of my report. First I will give a basic description from an overall point of view: In the new Swedish pension system the requirements, on a work and a good income in order to receive a good pension are fundamentally higher   compared to the old system.

A person who is 30  years old today can expect a pension corresponding  to somewhere between 40 to 45 percent of his final  salary, from the age of 65. In addition occupational  pension can be expected to give some 10 percent  more. In the new pension system will the major part  of the paid income related pension be converted into the so called consistency index. The consistency  index means that the yearly pension increase calculation will be done by deducting 1,6 percent from the corresponding overall compensation level. This means that we already know by the design of the rules that pensions, when they have been appropriated not will follow compensations. The automatic balance is a mechanism that, beyond all other restrictive elements in the new pension system, will be activated if state income will not be enough. If state finances will be in unbalance this mechanism will come in function and reduce pensions to a level necessary in order to restore the finance balance.



Sweden has a new national (public) pension system from 1999 and the first pensions from the new system were paid 2001.





The national pension consist of income pension, premium pension and - for those with a low income

or no income - guaranteed pension. Together they compensate the earlier old-age pension system and ATP-system.





The public pension depends amongst other things on how much you earn during the time you live in Sweden. 




 It means that in principle all what you earn and pay taxes for give pension. But you only got pension for yearly income up to a certain ceiling. The maximum income ceiling is 7,5 base amounts per year, equivalent to about Euro 34.500 in 2004. In addition to real paid income there are also other activities that give pension rights,  called pension qualifying income. An individual can receive pension qualifying income for being home with small children (so called childcare years), currently retired, doing national service and for higher studies.



18,5 percent of your income and also other income (for instance unemployment relief and sick pay) up to the maximum income level is reserved to a pension charge which finance the pensions. 16 percent goes to income pension and 2,5 percent to premium pension. Guaranteed pensions are financed with taxes.



Guarantee pension is a basic security pension. For anyone whose lifetime earnings have been low, or who has had no earnings at all. It guarantees that nobody become a lower pension than Euro 675 per month if you are married and Euro 760 if you are alone. It can at some events completes with a housing supplement. Guarantee pension can be used at 65 years age. You must have lived at least three years in Sweden to  apply for it and to receive a full guarantee pension it demands that you have lived from your 25th birthday until your 65th birthday. For certain other groups,  such as refugees entitled to protection, special rules apply. Guarantee pension are financed with taxes.




Income pension is a distribution system as well as  the former ATP was, meaning that the charges who comes  in, directly are forwarded as pension to those who are pensioners today. In a equivalent way will your pension be paid from those who works when you are pensioner.  16 percent of your income and other tax duty compensations go to the income pension.

Your pension rights for the income pension are added year after year and become, after enumeration with the common wage development in society, your right to income pension when you become pensioner.





2,5 percent from your pension qualifying income and other tax duty compensations go to the premium pension.  An individual born before 1954 become a lower percentage.

These money who are reserved for premium pension are not paid to the pensioners today but are saved to be paid when you become a pensioner.

The money are invested in equity- or interest funds which you can chose up to five yourself among about 600 who are available. The value growth then decides how large your premium pension will be. You are allowed to change funds without any costs.


You may also transfer your premium pension rights to your husband /wife, but the balance transferred will be reduced by 14 percent.




Different groups of age are included in a different way of the public pension.



An individual born 1937 or earlier is not included at all in the new public pension system. He or she will receive their entire pension from the former ATP-system.



1938 TO 1953

An individual born between 1938 and 1953 gets its pension from both pension system. The size of pension  from each system is decided by year of birth.  For instance will an individual born 1938 receive 4/20 of his pension from the new system and 16/20 from the old system. That one born 1939 become 5/20 from the new  and 15/20 from the old system and so on and so forth. According to the so called guarantee rule you are  guaranteed at least the same pension which you have earned in the ATP-system until 1994. From 1995 your  income give you right even to premium pension.



An individual born 1954 or later is fully included in the new pension system. All the ATP-points you have earned are recounted to pension rights for the income pension. Your income from 1995 give you also right to premium pension.




I´m aware of the fact that this report is rather brief, but I prefer to present it to you in this way rather than in a  long and very detailed one since I´m not an expert. The opinion in Sweden about the new pension system differs depending on whom you ask. Our politicians are clearly positive but the general public seems rather indifferent. In my view this is because they don´t know very much about the details and consequences (it was negotiated in the so called “small rooms” in our parliament) and the organisations for pensioners have´nt   protested too much.


The system are what we can afford in future from our politicians point of view.

A lot of representatives from the European governments have visited Sweden in order to learn more about our system and how our politicians managed to pass it through the parliament and gain acceptance from all  parties. The pension policy group in AGE have set up some common guiding rules and policies and has sent a report to the EU-top meeting in March 2003, whit their views on fundamental areas in the coming reform activities. They have also expressed a lot of opinions related to the new Swedish system.Future will show how other countries in Europe will act in order to reform their systems. A lot of countries are at the moment working intensely with these matters and are in the middle of their efforts .Major countries like Germany, France and Great Britain have already encounted a lot of opposition and have “a long way to go” before they can come

through. A lot of experts agreed about the necessities to work longer hours each week and create growth in

society. Without that coming generations (children and grand children) will have a very difficult future. What are we leaving to them?

Wilhelm Lemchen (Sweden)

Vice-President of the Group