Retirement, Pensions and Work in Sweden

Most countries including Sweden have an ageing population. The costs of the welfare state increase with the old age share, leading to problems for public finances. If the number of hours worked increases, tax revenues increase and less income transfers are paid out. A higher retirement age is one way to increase the numbers of hours worked in the economy. The age when people leave the labour market has already increased in Sweden. The new pensions system is part of the explanation but improved health and changes in the educational level of the cohorts close to retirement are also important. The problem of financing the welfare state is however not solved by that development. We conclude our article by discussing changes in laws and collective agreements which may contribute to further increases in the actual retirement age. We also shortly discuss the implications of the present economic crisis.