Working environment one important key to get Swedes to work for longer

“This is truly one of our time’s most important public reviews,” said the Minister for Social Security, Ulf Kristersson (the Moderate Party) when he presented the over 500 pages long public review alongside rapporteur Ingemar Eriksson.

It is exactly one hundred years since Sweden’s first pension reform was presented. Back then life expectancy was 59 years and the retirement age 67. Today Swedes’ life expectancy is more than 81 years, which puts pressure on the pension system. Pensioners are increasing in numbers and the relation between the number of people in work and people drawing pensions has shifted. There were several major pension reforms in Sweden in the 1900s. In 1959 came the ATP reform which stated the 15 best working years out of 30 would count towards people’s pension. In 1976 the retirement age was lowered.

“This was part of the 1900s great project - to reduce the part of life which is spent working. I believe that is a bygone era,” said Ulf Kristersson.

Success story changes requirements

The suggested changes are, according to the Minister for Social Security, really the results of a success story, a consequence of the successful welfare policies of the 1900s which created the historically unique situation where the number of people living past 100 years has surpassed the number of deaths in young children. But if we live longer we must also work for longer. 

“If not our pension levels fall short, the burden of supporting pensioners becomes unreasonable and the financing of welfare comes under threat”, says the review. So the gist of the conclusion from the pension review is that we need to find different ways of making it easier for older people to work for longer, and the report suggests some 50 ways of doing this.

The review introduces a new term; ‘a recommended retirement age’ to be used instead of the traditional retirement age. The recommended retirement age is linked to life expectancy. It should be a no-choice alternative for those who want to achieve an acceptable pension level. Age limits will therefore be increased for various types of pension pay and other benefits. Today people have a legal right to work until they turn 67. That will rise to 69. It is also possible to draw occupational and private pensions after the age of 55. From 2017 this will rise to 62. The previous limit for the earliest possible drawing of old age pensions will also increase from 61 to 62 in 2015, and to 63 from 2019. The age limit for the so-called guaranteed pension rises from 63 to 65, and the same applies to sick benefits and more.

65 has long been the benchmark for retirement and it is indeed the age at which 80 percent of Swedes stop working. But society has an outdated view on old age, the review claims. 

“Age is not a good measurement of employability and health. We cannot have rules which remove people who are healthy. Our task is therefore to change the way retirement works,” said rapporteur Ingemar Eriksson.

A plethora of proposals

Getting people to work past 65 is about more than economic incentives. There are other obstacles preventing people from staying in work into older age, the review notes. So how do you change a well established behavioural pattern? How can people manage to stay in work for longer? 

One idea is to improve work environments. The Work Environment Authority should be given more resources to work with measures which help older people manage to stay in work, but also to inform and spread knowledge about what older people can do in the labour market. There is also a plan to do more research on which factors push some older workers out and what makes others stay. Strengthened legislation will continue to protect against age discrimination, and older people will be given more opportunities to improve their skills for longer into their careers. This could allow them to change jobs or develop their existing career. 

One proposal is to grant people aged between 55 and 57 a 40 weeks student loan. Older students should also be given so-called economic enhancement grants. Yrkesvux (an adult vocational training programme) and Komvux (adult education run by municipalities) should create courses for older people, and job centres should also be giving career advice for older people. Another proposal includes using tri-partite negotiations to explore the possibilities for creating more flexible working hours.

Pragmatic history

The review is now under consideration and politicians and different parties will have their say. Ulf Kristersson hopes the review, which has been carried out within the framework of existing pension agreements, will lead to exciting and constructive debates. Pension agreements in Sweden are usually arrived at in relative calm, and this has been noticed internationally, says the Minister for Social Security.

“In the spirit of Swedish pragmatism we have managed to arrive at a large pension reform with broad political support without any general strike, disruptive demonstrations or overturned trucks. Our hope now is that the review will lead to a long debate and become the platform for good reform work,” says Ulf Kristersson.