Stockholm.
Sweden already reformed the pension system in 1999 and added a funded pillar. The result is sobering.
In 1999, Sweden was one of the first countries in Europe to respond to the demographic challenge of an aging population retirement benefits reformed. With 2.5 percent of the contributions, it plays a role, albeit not a major one. The reform of the pension went hand in hand with a reduction in the pension level. Overall, pensions were reduced from 60 to 65 percent in 1999 to a roughly estimated 45 to 55 percent in the future, according to the pensioners’ association “Pro”. Also interesting:: Pension: Shares for old-age security – that’s what the coalition is planning
the 2.5 percent for equity funds Swedes can choose to invest in state-run actively managed funds or in one of over 100 private funds. Many pension funds made big losses, there were also cases of corruption, some funds had to be excluded due to a lack of seriousness, while others did well. also read: Equity pension: The traffic light coalition must come up with more
Pension: The sovereign wealth fund has a high return
Anyone who does not make an active decision automatically ends up in the “AP7 Såfa” sovereign wealth fund. There are currently over 60 percent of working Swedes. His average increase in value is around 12.5 percent per year. Most private funds are three percent lower. 94 percent of the AP7 portfolio is based on the global index MSCI ALL Country World. Investments are made in almost 3,000 companies from eleven sectors. These include Microsoft, Amazon, Apple and Johnson&Johnson. Also read:Invest money: Savings bonds, shares, gold – whatever is worthwhile now
Old-age security in Sweden today consists of several pillars. The first three are mandatory, the rest are voluntary. There is a basic security. If the pension is below the subsistence level, one applies guaranteed pension of up to the equivalent of around 850 euros per month and, if necessary, an additional housing benefit of up to a maximum of just under 650 euros.
Pension: The exact amount of pension is not known
The most important pillar is the earnings-related pension: its amount depends on contributions made by the workers and employers share. Together they amount to 18.5 percent. Of this, 16 percent will be passed on directly to today’s retirees.
No one knows exactly how much pension employees will receive once they have retired by paying into the pay-as-you-go system. On pension level is no longer guaranteed as it used to be. In the new system, a complicated formula regulates the payouts. pension payments automatically shortenedif the economic development in Sweden deteriorates and if the life expectancy of pensioners increases.
Company pension insurance is gaining in importance
Another pillar is company pension insurance. In the Swedish pension system, occupational pensions are treated as private mandatory deposit, but is borne by employers. These pay 4.5 percent of gross income into an often funded pension plan.
The insured can between bonds and equity funds decide, but bear the return risk themselves. Around 90 percent of all employees are on company pensions. The share of this type of pension in the total pension should be between 25 and 35 percent. In addition, there is the government recommendation for voluntary private insurance. Also interesting: Calculate pension correctly: You need to know this formula
The advantage of the reform: The pension is almost entirely from the state budget decoupled and is said to be able to do without tax subsidies in the future. In Sweden everyone pays into the pension fund, there is no civil service. The disadvantage: the pension has become less secure and significantly lower. The share pension does not change that either. You might also be interested in: Basic pension for 1.1 million people: More money in 2023
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