Work detail

Swedish Pension System

Author: Bc. Tomáš Hochmeister
Year: 2004 - summer
Leaders: doc. Ing. Ondřej Schneider MPhil., Ph.D.
Consultants:
Work type: Bachelors
Language: Czech
Pages: 85
Awards and prizes:
Link:
Abstract: This paper gives an integral view on the structure and the evolution of the Swedish pension system. The old public pension system faced severe problems of financial sustainability. In a series of steps in the 1990s, Sweden converted a two-tier defined benefit scheme into a combination of notional defined contribution (NDC) pay-as-you-go and financial defined contribution (FDC) schemes. The reform was driven by the changing demographic conditions, the threat of future large contribution rate increases, redistributional unfairness in the design of the old system and a goal of providing a framework that would promote mandatory saving through the pension system – but with privately managed assets invested on the capital market. Together with the implementation of the pension benefits based on lifetime contributions this is the major shift in the Swedish welfare policy.
This paper discusses also the potential benefits of the NDC concept in the context of the Czech Republic, including the major constraints for implementation.
Downloadable: Tomáš Hochmeister
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