By Patrick Anderson
Booklet by way of Anderson, Patrick
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Extra info for Ageing and Employment Policies: Sweden (Ageing and Employment Policies)
In order to better appreciate the significant reforms introduced under the new system, and the relatively long transition period involved, it may be useful to briefly describe the main characteristics of the old system. The old public pension system was a defined benefit scheme with low incentives to work and no connection to economic growth. The system consisted of a flat-rate pension provided in full to everyone with at least 40 years of residence in Sweden between the ages of 16 and 65, or 30 years of contribution.
The percentage of the pension can be increased at any time, but decreased only every six months and new pension entitlements will always be earned on any pensionable income. Therefore, if a person continues or restarts to work after retirement, the pension will increase. The calculation of new entitlements takes into account the shorter remaining life expectancy when new entitlements are converted to pension entitlements, thus the age at which new pension credits are earned affects the pension level as well.
As cited in the complaint of 20 November 2001 by the Swedish Confederation of Professional Employees’ (TCO) and the Swedish Trade Union Confederation’s (LO) against Sweden for breach of ILO Conventions. 53 Sweden’s statutory retirement age was 65 years in the old system and, thus, in line with most other countries, but the effective retirement age is around one year higher the average effective retirement age across OECD member countries. Although, among the Nordic countries, only Finland has a lower effective retirement age for both men and women.