Today’s pension system can be perceived by many as a tangled jungle. However, it is a stable system that gives all citizens some form of financial security in old age.
The average public pension in July 2024 was SEK 15,600. For women, however, the figure was only SEK 14,500 and for men SEK 16,700 per month.
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Today, your pension can consist of several parts and come from several different sources. Everyone who has worked or lived in Sweden is entitled to the general pension. In addition, there is also an occupational pension, which the employer sets aside every month during your working life. It refers to a couple of percent of your salary.
It is also not unusual for private individuals today to have their own pension savings. It is a completely voluntary supplement to the other pension that you yourself own and control. Savings can take place via banks or insurance companies, where you can choose whether you want to invest the money in funds, shares, securities or another account provided by the bank or insurance company.
Source: The Pensions Authority
The first Swedish pension proposal
But the pension system as we know it has not always looked like it does now. Over the years, several reforms have been implemented and for a time even the pension system was close to being eroded.
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However, we need to turn back the clock to the year 1906. Namely, then Gustaf Adolf Raab the man who worked to establish a national pension institution in Sweden. In it, all men and women would be obliged to pay a pension contribution in order to be able to receive a pension payment after working life. When he presented his elaborate pension proposal in 1906, among others, the Social Democrats’ Hjalmar Branting Active. Parts of the party believed that the pensions would be far too low.
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Hjalmar Branting was active in the investigation of Gustaf Adolf Raab’s pension proposal. However, some individuals within the Social Democrats felt that the amount the pension would result in was too low. Photo: Pressens bild/TTThe first reform of the pension is carried out
On 21 May 1913, the Riksdag subsequently adopted the introduction of a general old-age pension insurance. All Swedes would therefore be covered. Compensation was received if one reached the age of 67 or was unable to work.
In 1936, a reform of the pension was carried out where a basic pension, which assumed paid contributions, was introduced. In addition, a supplement that was controlled by income level was added.
In 1946, the national pension was introduced
In 1946, the very first national pension was introduced, which resulted in all Swedish citizens who turned 67 receiving SEK 1,000 in annual pension. The pensioners who reached the age limit and were also married instead received SEK 1,600 in annual compensation. In addition, there was the possibility to also apply for housing allowance.
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The Social Democrats’ election poster from 1957. Poster, in connection with the ATP vote. Photo: TT1960 replaces the ATP national pension system
However, the national pension would result in high costs for society where both state and municipality had to contribute to juicy tax amounts to the citizens. This eventually resulted in the introduction of the ATP system in 1960, which then replaced the former national pension.
The Pensions Authority signs its homepage that they wanted to create “a mandatory occupational pension system based on the principle of loss of income”.
“For the first time there was a system for everyone where the pension was regarded as deferred salary for work performed and not as a grant. The system consisted of a national pension that was equal for everyone, and an income-based supplementary pension ATP,” they write.
Leif Victorin, vice president of Skandia Groups, presents a new ATP system at a conference at Berns in Stockholm in 1991. Photo: Hans T Dahlskog/TT The public pension funds were being depleted
The downside of the ATP system eventually turned out to be that it was not linked to the socio-economic development or increased life expectancy of the citizens. As growth in Sweden slowed at the end of the 20th century, forecasts showed that the established general pension funds, also known as the AP funds, would be depleted shortly after the turn of the millennium. This resulted in another pension reform to be implemented in 2002.
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This is how today’s pension system was created
But as early as 1984, a parliamentary committee began a comprehensive analysis. Six years later, in 1990, it was possible to state in the compiled report that solutions were required. But some of these could not be agreed upon in the committee.
Therefore, the Pension Working Group was appointed in 1991, containing both economic experts and politicians. In 1994, they were able to launch a proposal containing a reformed old-age pension system that was promptly adopted by the Riksdag.
“Previously, Sweden had a pension system that consisted of national pension and ATP, general supplementary pension. The old system was replaced in 2002 by today’s system with a general pension,” states the Pensions Agency on its homepage.
The reform that was put into use in 2002 is what we now know as today’s pension system, which is the basis for what you get as a pensioner.
On 1 January, the Pensions Agency is also established. The motive was that they wanted to improve communication and information about the pension system to savers and pensioners.
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On 1 January 2010, the Pensions Agency started its operations. Photo: Pontus Lundahl/TT
Sources: The Pensions Authority and seventh AP fund
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