The calculations of today's pension system are based on shorter average life expectancy
LO recently submitted a report on the economic consequences for wage earners of the “new” pension reform. The Swedish pension system was entirely revised in the middle of the 1990s and the new one introduced in 1998. There will be a transitional solution. The old pensions system will be removed gradually and the pensions of people born after 1953 will be paid fully according to the new system. The findings of the now published report reveal that the average industrial worker today has to work another two years in order to achieve the same level of her/his retirement pension as in 1995 when the reform was introduced.
The reason for having to stay longer in gainful employment is that the average life expectancy in 2011 has increased by some two years compared to 1995 which is the year that the system is based on. At that time it was estimated that after 45 years of gainful employment, the national pension of an industrial worker would be 62 percent of his/her final earnings. But today, the pension of the same industrial worker is only 54 percent of the final earnings. Under present conditions, it would be necessary to work for another two years and retire at the age of 67 in order to obtain 62 percent of the final earnings.
Workers with insufficient education are most badly hit as they often leave the labour market before retirement age and their length of life is shorter than that of those with higher education. The reason for this is, above all, that those with lower education work in an environment which, to a higher degree, is more strenuous, Wanja Lundby-Wedin commented.
It may seem reasonable that a longer life expectancy also implies a longer working life. Unfortunately, the general improvements as regards better health and longer length of life have not favoured everybody. Most alarming is that a great number of members of the LO affiliated unions are not capable of working until the age of 65.
We must reinforce our efforts to achieve a sustainable working life which makes it possible for more people to stay longer on the labour market. Improved working environment, further education, rehabilitation and secure forms of employment are necessary to enable more workers to increase their national pensions and make it possible for them to end their working life while they are still healthy, Wanja Lundby-Wedin concludes.