A reformed pension system

From: Ministry of Health and Social Affairs

Creating a pension system is a major task, and fundamentally redesigning an already established general pension system is difficult. Such efforts require much determination, ingenuity and broad support to succeed. The reformation of the Swedish pension system was characterised by a spirit of cooperation and a willingness to compromise that, in an international perspective, defined Swedish policies in the 1900s, and is often seen as being characteristic of the Swedish model.

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In the 1990s, Sweden reformed its previous defined benefit pension system (ATP), which came into force in 1960. The reform was very far-reaching and brought about by the fact that the system at the time was economically and demographically untenable, which could ultimately have jeopardised the Swedish economy. The new contribution-defined system with fictitious pension rights in a distribution system was innovative, and this type of system even got its own name – Notional Defined Contribution (NDC).

The reform process started with an outline of how the system would be designed, drawn up by five Riksdag political parties. This outline of the new pension system was issued 25 years ago, published here in an English translation, and paved the way for investigation and reform work that continued throughout the 1990s. The pension system has now been in force for many years, and it can be noted that decisive and principle parts of the system coincide with the solution presented in the August 1992 document.