Like the Social Security system in the United States, the Swedish pension plan uses current workers’ contributions to fund current retirees’ benefits. Beyond that, however, the differences are vast, says the Wall Street Journal.
For instance, under the Swedish programme:
The concept of individual accounts has been key to selling the plan to Swedes, says the Journal. Advocates say seeing their retirement expressed as an individual account has the psychological effect of encouraging people to work longer to win bigger benefits. And in fact, since the change took effect, the average age at which Swedes retire has risen to 63, up from the official retirement age of 61.
There have been detractors, however, mainly among organised labour that would prefer largely subsidised guaranteed plans, says the Journal. But many others are catching on:
Source: Joellen Perry, Sweden’s Pension Antidote, Wall Street Journal, March 5, 2007.
For text: http://online.wsj.com/article/SB117306202234226586-search.html
For more on International Issues: http://www.ncpa.org/sub/dpd/index.php?Article_Category=26
FMF Policy Bulletin/ 29 March 2007
