Social Security (Sweden)

Sweden's long-successful economic formula of a capitalist system interlarded with substantial welfare elements was challenged in the 1990s by high unemployment and in 2000-02 by the global economic downturn, but fiscal discipline over the past several years has allowed the country to weather economic vagaries.

Government pension system

Between 1998 and 2001 the system was converted from a 100% PAYGO system to a system where some money is saved and invested.

Government pension payments are (supposedly) financed through an 18.5% pension tax on all taxed incomes in the country, which comes partly from a tax category called a "public" pension "fee" (7% on gross income), and 30% of a tax category called employer "fees" on salaries (which is 33% on a netted income). Since January 2001 the 18.5% is divided in two parts, 16% (supposedly, there are no external independent audits or reports) goes to current payments. And 2.5% goes in to individual retirement accounts, which was introduced in 2001. Money saved and invested in government funds and IRAs for future pension costs are roughly 5 times annual government pension expenses (725/150).

There are five government funds that manage money for future retirees.

Levels and flows

Levels from 2004 and flows (during 2003 unless otherwise noted)

• Government pension expenses: 155 billion kronor
  • Government IRA pension payments: 11 billion kronor
• Taxes reported as going to government pensions costs (14% of this (2.5/18.5) is going to the "PPM" IRAs)
  • "Public" pension "fee": 71 billion kronor
  • Employer "fees" (30% of them): 105 billion kronor
• Saved and invested money in IRAs and in five government funds: 725 billion kronor
  • Five government "buffert" funds assets: 605 billion kronor
    • The "first" government pension fund: 148 billion kronor [1]
    • The "second": 149 billion kronor [2]
    • The "third": 152 billion kronor [3]
    • The "fourth": 143 billion kronor [4]
    • The "sixth": 13 billion kronor [5]
  • Government individual retirement account assets: 120 billion kronor [6]
    • The "seventh" government pension fund for IRA money: 39 billion kronor

External links

• Federal government annual report 2003 (not in english, in native language)
• Government income statement 2003 (in native language)
• PPM - For Fund Managers - Introduction

See also

• Economy of Sweden
• Income tax
• Social security

External links

• Health care, health, social issues/insurance