The annual Melbourne Mercer Global Pension Index placed the Swedish pensions system behind the Netherlands, its Scandinavian neighbour Denmark, Australia and Finland.
It was placed in the B category, “a system that has a sound structure, with many good features, but has some areas for improvement that differentiates it from an A-grade system”.
The Netherlands and Denmark were the only countries out of 37 included in the final report that were awarded an A grade, with each receiving scores of over 80.
Sweden’s index value meanwhile dropped from 72.5 in 2018 to 72.3 this year, but the report stated this was mainly due to updated UN data and a fall in real economic growth reported by the IMF.
The value was divided into three sub-indices: adequacy (benefits, system design, savings, tax support, home ownership and growth assets), sustainability (pension coverage, total assets, contributions, demography, government debt and economic growth) and integrity (regulation, governance, protection, communication and operating costs). Sweden received a B grade in the former two and an A grade in the latter.
The report suggested the Swedish pensions system could be improved by:
- Further increasing the state pension age to better reflect increasing life expectancy
- Ensuring that all employees can make contributions into employer sponsored plans
- Reintroducing tax incentives for individual contributions
- Introducing arrangements to protect all the pension interests of both parties in a divorce
The easiest way to understand how the Swedish pension works is breaking it down into three parts. There are three different sources: the state, your employer and yourself.
Overall, the amount you receive will depend on factors such as your salary, your other benefits, how long you work in Sweden, when you start collecting your pension, how your occupational pension scheme is structured, and how much you save in private funds.