Government newsletter - Longer life, longer working life
18 May 2012

Longer life, longer working life

An older man in a doctor's coat sitting in front of a computer Photo: Johnér

During this electoral period, modern Swedish welfare policy will reach its centenary. The first national pension system of 1913 ushered in a century of social reforms. Unlike other countries, Sweden adopted a welfare policy that applied to everyone. Not that it was overly generous: the retirement age was 67, at a time when the average life expectancy was still only 59.

A hundred years later, though the challenges facing welfare policy have changed, some fundamental truths still apply: in the long run, only a society in which most people work and support themselves can afford to give generous help to those who cannot do so. Rights and responsibilities must go hand in hand. Work, independence and an income of one's own are at the heart of welfare policy. But there is no lack of significant challenges for welfare as we prepare to celebrate the centenary.

Over close to one hundred years, Sweden has built up a welfare model that commands admiration and respect. Though we are far from perfect, we have reason to be proud, both of our successes and of our ability to face the facts and make changes when the suit no longer fits. The Swedish pension reform is a good example of this kind of pragmatic willingness to change.

Inquiry proposes adjustments for a longer working life

The reformed pension system confronts Sweden with new challenges. Though the pension agreement has been applauded, and with good reason, we cannot afford to relax. We Swedes are living longer, with many people enjoying more years of good health. Just since the reform, the average life expectancy for men has increased by two years. If we do not start working longer now that we are living longer, there is a risk that the stable pension system will result in dwindling pensions when we do retire.

An older man in painter's clothes carrying buckets of paint. Photo: Johnér

The Retirement Age Inquiry has presented its interim report. The Inquiry's analyses show that while opportunities for older people to carry on working longer are steadily improving, there are still obstacles that need to be tackled with broad and mutually reinforcing measures. Working conditions need to be improved and adapted to older workers' needs. The rules of the national public pension and occupational pensions systems need to be revised to facilitate longer working lives. Government agencies, employers and the social partners need to change their attitudes towards employing older workers. In this interim report, the Inquiry presents an overview of the conditions required for and obstacles impeding a longer working life for older people and an increase in the actual retirement age.

Higher housing supplement for pensioners

In 2012 the Government has taken steps to put the pensioners with the lowest incomes in a better financial position. The housing supplement for pensioners paid to eligible old-age pensioners is being raised by SEK 170 per month. In addition, a similar improvement is being made for those receiving special housing supplement or maintenance support for elderly persons. Over the last three years, the Government has lowered taxes for pensioners, particularly pensioners with low incomes. A person receiving a guarantee pension now pays SEK 6 000 less in tax per year.

Life for pensioners in Sweden

Patterns for stopping working have begun to change. The old 65-year boundary is not as unquestioned any more, and this has income consequences for increasing numbers of older people. The Ministry of Health and Social Affairs has held a seminar Pensionärernas levnadsförhållanden (The situation of pensioners) on its report Efter 65 - inte bara pension (After 65 - not just a pension), describing the financial situation of older people in Sweden and how it has changed in recent years.

Pensions in Sweden: how the system works

The Swedish pension system consists of several parts: the income-based pension, the premium pension and the guarantee pension. In addition, most people receive an occupational pension and some also have private pension plans. Pensions are based on lifetime earnings. They are linked to economic growth in Sweden and the system is designed to tolerate demographic changes.

How the Working Group on Pensions works

The Working Group on Pensions consists of representatives of the five parties that support the pension agreement (Social Democratic Party, Moderate Party, Liberal Party, Centre Party and Christian Democrats). Chaired by Minister for Social Security Ulf Kristersson, the Group is responsible for safeguarding the agreement and preserving the pension reform and its fundamental principles.

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