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The Swedish Experience with Pension Reform

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  • Annika Sunde´n

Abstract

Sweden is one of few countries in Europe to have introduced a comprehensive pension reform. In 1998, Sweden passed legislation that transformed its public pension system to a notional defined-contribution (NDC) plan-- that is, a defined-contribution plan financed on a pay-as-you-go basis. In addition, a second tier of funded individual accounts was introduced. The reform had broad political support with more than 80 per cent of the votes in parliament. This paper discusses the trends in retirement in Sweden and assesses the experience with pension reform. The objective was to design a fiscally sustainable system tied to economic growth with a clear link between contributions and benefits. We discuss the challenges in meeting this goal, the extent to which the Swedish reform has succeeded, and how the system affects beneficiaries. The paper evaluates the experience of the individual funded accounts to date and concludes with an outlook for the future. Copyright 2006, Oxford University Press.

Suggested Citation

  • Annika Sunde´n, 2006. "The Swedish Experience with Pension Reform," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 22(1), pages 133-148, Spring.
    • Handle: RePEc:oup:oxford:v:22:y:2006:i:1:p:133-148
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    Cited by:

    1. Cattan, Sarah & Kamhöfer, Daniel A. & Karlsson, Martin & Nilsson, Therese, 2017. "The Short- and Long-Term Effects of Student Absence: Evidence from Sweden," IZA Discussion Papers 10995, Institute of Labor Economics (IZA).
    2. Hagen, Johannes, 2013. "A History of the Swedish Pension System," Working Paper Series, Center for Fiscal Studies 2013:7, Uppsala University, Department of Economics.
    3. Sonia Bhalotra & Martin Karlsson & Therese Nilsson & Nina Schwarz, 2022. "Infant Health, Cognitive Performance, and Earnings: Evidence from Inception of the Welfare State in Sweden," The Review of Economics and Statistics, MIT Press, vol. 104(6), pages 1138-1156, November.
    4. Magnus Dahlquist & José Vicente Martinez & Paul Söderlind, 2017. "Individual Investor Activity and Performance," The Review of Financial Studies, Society for Financial Studies, vol. 30(3), pages 866-899.
    5. Linda Kridahl, 2014. "Retirement and leisure: a longitudinal study using Swedish data," Vienna Yearbook of Population Research, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna, vol. 12(1), pages 141-168.
    6. Edin, Per-Anders & Selin, Håkan, 2022. "Financial Risk-Taking and the Gender Wage Gap," Labour Economics, Elsevier, vol. 75(C).
    7. Sarah Cattan & Daniel A Kamhöfer & Martin Karlsson & Therese Nilsson, 2023. "The Long-Term Effects of Student Absence: Evidence from Sweden," The Economic Journal, Royal Economic Society, vol. 133(650), pages 888-903.
    8. Le Blanc, Julia & Scholl, Almuth, 2017. "Optimal Savings For Retirement: The Role Of Individual Accounts," Macroeconomic Dynamics, Cambridge University Press, vol. 21(6), pages 1361-1388, September.
    9. Betermier, Sebastien & Jansson, Thomas & Parlour, Christine & Walden, Johan, 2012. "Hedging labor income risk," Journal of Financial Economics, Elsevier, vol. 105(3), pages 622-639.
    10. Timothy Smeeding & Eva Sierminska & Andrea Brandolini, 2006. "Cross National Comparison of Income and Wealth Status in Retirement: First Results from the Luxembourg Wealth Study (LWS)," LWS Working papers 2, LIS Cross-National Data Center in Luxembourg.
    11. Adam Hannah, 2021. "Procedural tools and pension reform in the long run: the case of Sweden [The new politics of the welfare state? A case study of extra-parliamentary party politics in Norway]," Policy and Society, Darryl S. Jarvis and M. Ramesh, vol. 40(3), pages 362-378.
    12. Callan, Tim & Keane, Claire & Walsh, John R., 2009. "Pension Policy: New Evidence on Key Issues," Research Series, Economic and Social Research Institute (ESRI), number RS14.
    13. Miroslav Verbič & Rok Spruk, 2019. "Political economy of pension reforms: an empirical investigation," European Journal of Law and Economics, Springer, vol. 47(2), pages 171-232, April.
    14. Lars Norden, 2010. "Individual home bias, portfolio churning and performance," The European Journal of Finance, Taylor & Francis Journals, vol. 16(4), pages 329-351.

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