Sweden, an example for France? When it comes to pension reform, the most populous of the Scandinavian states is often cited as an example. But the former director of the Swedish Social Security, who brought the reform twenty years before, assures today that the new system poses a problem… and advises against continuing down the same path. “We have a new formula for calculating pensions. We need people to work longer, but we don’t explain it to them and we don’t help those who need it,” Karl Gustaf-Scherman told reporters. bfm tv.
Following a financial crisis, Sweden completely overhauled its pension system during the 1990s. The aim was to encourage Swedes to retire later by notably changing the pension calculation. The country then abandoned its pay-as-you-go regime and the calculation for life annuities, the same system that currently exists in France, for a mixed regime that combines pay-as-you-go pensions (that is, the contributions of the workers pay the pensions of the employees ) and capitalization pensions (workers save for their own retirement).
Distribution and capitalization
The Swedish model is based on a universal basic pension, managed by the State, which represents around two thirds of the amount of the average pension. It is a pay-as-you-go scheme with a “notional account”: in general terms, the contributions deducted during the degree finance the pensions of retired Swedes but are also accumulated in a “virtual account”. When he retires, the employee has a virtual sum that will be divided by the number of years that he statistically has left to live. The later the departure, the higher the pension, because the same sum is then divided by a smaller number of years.
In addition to this basic pension, there is a capitalization system managed by the social partners and assigned to each professional branch. This complementary scheme affects 90% of employees and represents less than a third of the average pension. Contributions from employers feed specialized pension funds, which have won contests issued by professional branches: the amount received upon retirement thus depends on changes in the valuation of the pension funds where the contributions have been placed. Lastly, there is also a personal capitalization system, which is rarely used.
One was “crucial”…
In addition, the notion of legal retirement age is different from that which exists in France. If you want to benefit from the guaranteed minimum pension as well as certain additional housing benefits, the worker must wait until he is 65 years old. This “fundamental” age plays the same role as the minimum number of contribution quarters that allows France to get out with a full-rate pension. Thus, the Swedish insured can leave earlier with a reduction in the level of his pension, as the French can do when he has reached the age of majority without having the necessary rooms.
This reform should encourage Swedes to work at least until the age of 65, but in fact, the average retirement age is still lower (64.7 years in 2021). Because many Swedes prefer to leave much earlier, especially those who have difficult jobs. Therefore, they opt for the formula that grants them a reduced pension.
This situation, combined with high inflation and mediocre returns from certain pension funds, contributes to the impoverishment of some Swedish retirees, especially single women. Protests against the pension system have been heard for several years.
…and a minimum age
Therefore, the government is struggling to increase the average retirement age, which poses a problem for the balance of the system, especially since life expectancy has increased faster than expected. To push Swedes to work longer, the government was forced to change the minimum age initially set for those who wanted to leave early (roughly the equivalent of our French legal age). Initially set at 61, it has been gradually raised to 62 and then 63 since this year. He will eventually reach 64 years of age.
Source: BFM TV
