The Swedish Pensions Agency (Pensionsmyndigheten) said last summer’s decision by the Swedish parliament to link state pension age to life expectancy from 2026 onwards will strengthen the main part of the state pension system.
The agency today reported the results of an analysis it has carried out, projecting how the income pension system – the pay-as-you-go system constituting the bulk of state pensions – would fare under various scenarios over the next 75 years.
The data revealed there would be a continued high expected surplus in the income pension system.
Erik Granseth, analyst at the agency, said: “Even on a pessimistic scenario, assets exceed liabilities during the entire projection period of 75 years, and that is because retirement ages are being raised in line with increasing life expectancy.”
The report – which analysed the pension system’s future in three scenarios – showed that the surplus in the pension system would be strengthened when the life expectancy-linked “target age” was introduced in 2026.
On 31 May 2022, Sweden’s parliament (Riksdag) decided to increase the age at which the state pension can be drawn to 63 from 62, and raised the age at which the guaranteed pension, income pension supplement and housing supplement can start to be paid out to 66 from 65.
It also introduced, from 2026, the concept of a target age for drawing a state pension and related benefits, which would be calculated every year reflecting the change in life expectancy, and then applied six years later.
The Swedish Pensions Agency said: “When retirement ages are raised, contribution assets in the general pension system improve.”
It acknowledged that the income pension system’s financial position depended on the development of several social and economic factors, but said that the surplus amounted to SEK1.3trn (€100bn) at the end of December last year – an increase of SEK100bn on the year before.
“In the base scenario, the surplus is expected to continue to grow due to an increasing population and that increased retirement ages lead to more employed people at older ages,” the agency concluded.
A month ago, the Swedish Pensions Agency called for reform of the state pension system, saying that the original principle that pensions were linked to an individual’s lifetime income had been lost.