Business · Economy · 3 hrs ago
Sweden combines public pensions with investment funds
Sweden’s pension system combines a public, pay-as-you-go pension with savings invested in pension funds.
The public system accounts for 60% of contributions, while the state supervises the investment-based pillar and offers 400 funds.
Retirees’ payments from investments depend on how much they have saved and how their investments perform.
One 69-year-old retiree built up €600,000 from her own and her employers’ contributions, and says her pension income doubled.
But investment returns can fall when markets decline, and people who can save more may benefit more.
Sweden uses the public system to provide more support to poorer pensioners, helping to reduce inequality.
The system has no deficit, and people retire at an average age of 67, later than in France.
Sweden combines a pay-as-you-go public pension with a state-supervised funded pillar invested in pension funds.
The public system accounts for 60% of contributions, while citizens can choose from 400 available pension funds.
Retirees’ payments from the funded pillar depend on the capital they have accumulated, and investment returns can fluctuate with markets.
A 69-year-old retiree cited in the report receives €3,500 gross per month after saving for 25 years and says her pension has doubled through funded savings.
The model has drawn interest but also raises concerns about inequality, market risk and investment in large US technology companies.
- Who
- Sweden’s pension system and its contributors and retirees.
- What
- The system combines pay-as-you-go pensions with a funded pillar invested in pension funds.
- When
- Not stated.
- Where
- Sweden.
- Why
- The funded pillar is intended to build retirement savings through investment; the public system also redistributes more to poorer people to reduce inequality.
Supporters of funded pensions
Critics of funded pensions
Retirement income
Supporters of funded pensions
A Swedish retiree said funded savings doubled her pension and gave her a good standard of living.
Critics of funded pensions
The report says funded pensions favour people who can afford to save more.
Investment
Supporters of funded pensions
A French worker in Sweden said market losses over a short period seemed negligible over several decades.
Critics of funded pensions
Economist Joel Stade said much Swedish pension investment goes to large US technology companies and suggested investing more in Swedish businesses would benefit society.
Jaël Waern began saving for retirement and investing in several pension funds.
Contributions can double in amount, according to the report.
A French worker in Sweden said he would have lost money over this one-year period.
The same worker said his investment had almost doubled since December 2021.
- Pay-as-you-go share
- 60% of contributions
- Available funds
- 400 pension funds
- Jaël Waern's age
- 69
- Jaël Waern's monthly pension
- €3,500 gross
- Jaël Waern's accumulated capital
- €600,000 from €300,000 saved by her and her employers
- Average retirement age
- 67 years
What people are saying
It allows me to take my grandchildren on holiday. I have a good standard of living. I don't count what's in my wallet.
The older you get, the less risky the investments are.
I think my retirement will be much more comfortable in Sweden than in France.
We can assume it would be better for society if we invested instead in our Swedish companies.
Sources
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