Swedish pension provider Skandia has published calculations which it said show the ongoing COVID-19 crisis risks reducing future pensions by several thousand kronor (several hundred euro) a month, depending on age and occupational group.
The firm said people would need to make extra savings of between SEK500 (€47.22) and SEK3,000 per month to compensate for the effects of the pandemic.
Mattias Munter, pension economist at Skandia, said: “Our assumptions in the report show that weaker growth and thus wage growth directly affects pensions.”
Skandia said savers could compensate for the financial hit by spending more time in the labour market, and published calculations based on a number of scenarios and various jobs.
If the economy made a rapid recovery, the firm said in the report that Swedes would see a monthly decrease in their monthly pensions of between SEK2,000 and SEK5,000, while a recovery that was only gradual would mean a bigger reduction.
Among individual examples given, Skandia said under the gradual economic recovery scenario, a primary school teacher born in the 1990s and a civil engineer born in the 1980s would see reductions of SEK3,000 and SEK7,000 respectively in their monthly pensions.
Munter said most Swedes said they wanted 80% of their salary during retirement, but added that this desired outcome rarely translated to reality.
“How much I need to save on my own has to do with several factors such as income level, how long I have worked and if I have an occupational pension,” he said, adding that how much someone could then actually save was a question of their individual financial conditions and will.
Suggesting how pension savers could make up for the lower pensions they were likely to receive as a result of the pandemic’s effect on the economy, Skandia produced calculations on the effect that staying in work for longer could have.
These showed that in the rapid recovery scenario, an individual could compensate by working for an extra year at 75% of previous hours, while if the economic bounce back was only gradual, that person would need to work at that level for just under two years.