Retrospective on Steven Glassman, “The Swedish Pension Reform” from Sweden: The Model Welfare State Meets the Future Perspectives on Business and Economics, Volume 22, 2004 Steven Glassman ‘04 is now Director of Finance at UnitedHealthcare within its Medicare & Retirement Insurance Solutions segment. Since 2004, has Sweden’s new pension system been successful? Sweden has reformed its pension plan after the first, created in 1998, was deemed unsuccessful. The current system consists of a guaranteed pension, an income pension, and a premium pension. In other words, “a national public pension from the state, an occupational pension from your employer and any savings of your own” (Pensions Myndigheten). With the new plan came two concerns about challenges that could potentially weaken it: income inequality among the elderly and increased life expectancy. To combat income inequality, “Sweden introduced in 2021 a new pension supplement, to be financed by the central government budget, to raise low pensions by up to about 7%. This will reduce old-age income inequality to some extent” (Lis & Boulhol). To handle increasing life expectacy, the reformed pension plan increased the retirement age. The pension system is facing threat to its financial sustainability due to an automatic adjustment mechanism that is considered one of the most effective in the world. Some worried that in the wake of the pandemic the AAM would be detrimental to the pension plan. However, “Due to the strong financial returns of pension funds in 2020 and 2021 and limited decline in hours worked during the COVID -19 crisis compared to most OECD countries, the automatic adjustment mechanism is not likely to negatively affect pension indexation or entitlements in the short term” (Lis & Boulhol). How has the new pension reform affected foreigners to the country?? Due to a new European Union rule in 2017, “the guaranteed pension was classified as a ‘minimum benefit’, which is only paid to people who reside in the country that grants the benefit” (Gray, 2022). Starting January 2023, about 58,000 expatriates will no longer receive their guaranteed pension if they no longer live in the country. However, the ruling does not stop them receiving their income pension, premium pension, or supplementary pension no matter what country they move to (Pensions Myndigheten). The ruling also states that an individual will no longer receive elderly financial support or housing supplement should they vacate the country. Additionally, leaving Sweden for a long time without moving permanently will affect the country’s definition of “resident” and thus impact the pension benefits as well. References Gray, Jack (2022). Nearly 58,000 Swedish expats to no longer receive guaranteed pension. European Pensions. https:// www.europeanpensions.net/ep/Nearly-58-000Swedish-expats-to-no-longer-receive-guaranteed -pension. Lis, Maciej & Boulhol, Hervé (n.d.). OECD Pensions at a Glance 2021: How Does Sweden Compare? Organisation for Economic Co-operation and Development. Pensions Myndigheten (2022). Your pension when you move from or live outside of Sweden. www.pensionsmyndigheten.se/other-languages/ english-engelska/english-engelska/pension-when -you-move-from-or-live-outside-sweden. Retrospective by Sidney Jankanish ’23, Political Science and International Relations Martindale Retrospectives 3 June 2023
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