The Swedish Pension Plan

 The following is taken from a report in the Globe and Mail  called In Sweden, pension problems are so 1989 posted by Nomi Powell  Posted on Friday, January 21, 2011 1:24PM EST and a report on the Swedish Pension Plan.

Swedes contribute 18.5 per cent of their pay to the system: 16 per cent to the NDC and 2.5 per cent to a private account where money is invested in mutual funds of their choice. The public pension is a significant portion of retirement income – responsible for 75 per cent of the average monthly benefit for men at 17,000 Swedish kronor ($2,562 U.S.) and women at 12,000 kronor. The rest comes from occupational pensions negotiated between companies and unions.

In a radical change, Sweden scrapped its traditional defined benefit pension for what's called a "notional defined contribution" plan (NDC). The notional account recorded each individual's contributions and a rate of return tied to the national per capita real wage growth. There was no "real money" in the account - as in traditional pension plans, contributions fund current retiree benefits – but the system provided a way of keeping score.

When workers retire, their annual benefits are calculated by dividing the account balance by the life expectancy rate and rate of return based on the growth of the economy. Benefits are adjusted each year taking into account changing life expectancies, inflation and the rate of return.


Workers can retire as early as 61, but the longer they stay in the work force, the higher their benefit upon retirement.  The following is a report that perhaps has some ideas for Canada

Pension Reform in Sweden: Lessons for American Policymakers By Goran Normann and Daniel Mitchell, Ph.D. published  June 29, 2000

Sweden was the first nation in the world to implement a universal government-run retirement system, but today it is in the process of privatizing part of its pension program. Facing problems similar to those that beset the U.S. Social Security system, the Swedes decided that personal accounts were the best way of ensuring that today's workers would enjoy a safe and comfortable retirement.

Sweden's former pension system was a tax-financed, pay-as-you-go entitlement program, similar to the United States' Social Security program. And like in the systems in the United States and other industrialized nations, demographic and financial changes were straining Sweden's tax-and-transfer pension programs. There were only two solutions: Raise taxes and cut benefits to prolong solvency, or give workers private retirement accounts.

In Sweden, policymakers decided that privatization was the best solution. The new system has four key features:

• Partial privatization. Workers can invest 2.5 percentage points of the 18.5 percent of their income that they must set aside for retirement. Soon workers will be able to choose the pension fund into which their funds will go.
• Notional accounts. The remaining payroll tax funds a dramatically restructured pay-as-you-go government program. Instead of paying benefits based on years in the workforce and earnings history, the new system provides a pension based on the amount of taxes a worker has paid into the system.
• Safety net to protect the poor. The government will continue to guarantee a minimum pension funded by general tax revenues.
• Transition to protect retirees and older workers. Current retirees and older workers will continue to receive retirement income based on the old program. Workers born from 1938 to 1953 will receive benefits from both the old and new systems as the new system is gradually introduced.

Swedish workers and retirees will benefit from these reforms. The combination of partial privatization and reform of the pay-as-you-go portion of the retirement system will result in a fiscally sustainable system. In addition, private investments over time will allow workers to benefit from compounding returns, which will increase retirement income. Finally, the reform will benefit the Swedish economy. By reducing the payroll tax rate and linking income to pension benefits, Swedish pension reform will increase incentives to work. The shift to a funded system will also increase national savings and provide capital for future growth.

The changes in Sweden's pension system provide important lessons for any country facing the problems inherent in pay-as-you-go, tax-and-transfer pension programs, including the United States. The first lesson is that reform works. As the Swedish reforms demonstrate, countries can change from a pay-as-you-go entitlement program to personal accounts. The second lesson is that reform is popular. Although many consider Sweden the ultimate welfare state, legislators from the right and left united in support of the new privatized system. They saw that the pension program could not continue to function as it had been. As a result, these lawmakers created a stronger retirement system for the Swedish people.

There are many benefits to Sweden's new system, including greater incentives to work, increased national savings, a flexible retirement age, lower taxes and less government spending, opportunities for more reform, a fairer system that no longer redistributes income from the poor to the rich, and greater retirement income for retirees. The reforms in Sweden could be a model for U.S. lawmakers as they grapple with the problem of Social Security.

In Sweden, pension reform has created a better system--better for retirees, better for workers, and better for the economy as a whole. The same advantages would accrue to Americans and the American economy--but only if U.S. lawmakers learn the right lessons from what is happening in other nations.

Göran Normann, Ph.D., President of Normann Economics International, based in Stockholm and Paris, is an associate professor of economics at the University of Lund, Sweden. He has worked with the Federation of Swedish Industries and the Organisation for Economic Co-operation and Development (OECD). Daniel J. Mitchell, Ph.D., is McKenna Senior Fellow in Political Economy at The Heritage Foundation.

The Coming Labor Shortage

 A report By Barry Bluestone and Mark Melnik, Kitty and Michael Dukakis Center for Urban and Regional Policy, Northeastern University Boston

Interesting thoughts from the report--the full report can be found here

With nearly 10 percent of the American labor force unemployed and  another 7 percent so discouraged by their job prospects that they have either dropped out of the labor force altogether or are working at parttime jobs when they would prefer full-time employment, it may come as something of a surprise that within less than a decade, the United States may face exactly the opposite problem – not enough workers to fill expected  job openings.

This analysis is based on official forecasts of population  growth from the Census Bureau; official forecasts of job growth and labor force participation from the U.S. Bureau of Labor Statistics; and estimates of the number of jobs in specific occupations based on the Labor Market Assessment Tool developed jointly by the Dukakis Center for Urban and Regional Policy at Northeastern University and the Research Division of the Boston Redevelopment Authority.

Encouraging people to work longer will go a long way toward preventing such a significant labor shortage. Fortunately, boomers are not expected to retire at anywhere near the same rate as earlier cohorts of older workers. In fact, large increases in labor force participation are expected to occur among those aged 55 and older, with 55- to 64-year-olds increasing their participation rate from 64.5 to 68.1 percent between 2008 and 2018. Those aged 65 to 74 are expected to increase theirs from 25.1 to 30.5 percent. And those 75 and older are projected to increase their participation rate from 7.3 to 10.3 percent.

 But these increases may still not be enough to avert a labor shortage. Using official estimates of projected labor force participation rates, our research shows that there would still be 3.3 million to 4.0 million jobs that could go unfilled between now and 2018. More than 1.5 million of these unfilled jobs would be in the social sector.

As our analysis demonstrates, many of these jobs will go begging unless older workers move into them and make them their encore careers.

 In the current economy, there are so many unemployed people that younger workers seem to be competing with older workers for available jobs. If the economy recovers, as employment projections predict it will, this competition will all but disappear. Instead of workers jockeying for jobs by enhancing their skills to gain the approval of employers, we may find that employers are forced to find ways to enhance their jobs to attract older workers to fill them.

Not only will there be jobs for these experienced workers to fill, but the nation will absolutely

need older workers to step up and take them – to assure continued economic growth and to
provide the critical social and government services on which we all depend.

Do you remember the times of your life?

Boomers want to tell their story and song lyrics can help you do this as will writing down the answers to the questions given below, which arose when I was listening to a song from Paul Anka called Do you remember the times of your life? I am sure you will generate more questions than I have given you here  that will lead to more stories for your grandchildren and your children.


For those who keep diaries, the stories are all ready written for your children to read—they will understand you more and because of that understanding honour you more when you are gone.
(Speaking from one who was given the opportunity to read my mother’s diary when she left us, I know this is true). 


For those who are diary writers here are some questions to answer, so your story can live on, when you leave us.

Paul Anka wrote a song with the following lyrics called Do you remember the times of your life

Good morning, yesterday
You wake up and time has slipped away
And suddenly it's hard to find
The memories you left behind
Remember, do you remember
The laughter and the tears
The shadows of misty yesteryears
The good times and the bad you have seen
And all the others in between


Remember, do you remember
The times of your life (do you remember)
Reach back for the joy and the sorrow
Put them away in your mind

The memories are time that you borrow

To spend when you get to tomorrow
Here comes the saddest part
The seasons are passing one by one
So gather moments while you may
Collect the dreams you dream today


Remember, will you remember
The times of your life
Gather moments while you may
Collect the dreams you dream today
Remember, will you remember
The times of your life
Of your life
Of your life
Do you remember, baby
Do you remember the times of your life?


Questions to help you tell your story:
Do you remember:

• Your first day of school
• Your first crush
• Saturday morning television---shows such as Rin Tin Tin, or Roy Rogers.
• Early TV shows such as I love Lucy, The Untouchables, Biography, with Mike Wallace, Perry Mason
• Where you were when the Beatles were on The Ed Sullivan Show
• Your first rock concert
• Where you were when Woodstock was on
• About your first elementary school, Junior High, High School
• The community where you grew up
• Your friends from these classes
• Why you selected the college you went too
• If college was amongst your happiest times
• The person in college that you thought was the one
• Your first date with the person you married or that led to the beginning of a long-term relationship

What do you talk about with your friends

When I am talking with my friends and others who are in my generation, there are a number of topics that reoccur. I am not sure if there is any research into this area (I am sure there is somewhere) and I am sure the research would prioritize these items so that I would know what others my age believed were important.


However, no matter what the research may say, what is important for me is the frequency that these items come up in conversation. So I suspect these are of importance to all Boomers (Sonic or Zoomer). The topics we discuss are, in order of frequency, for me and my friends:

• Family
• Financial Security
• Future Quality of Life-- What does retirement look like for me, where will I live, will I have enough money, what it is like to redefine myself and think of myself as a retiree
• Travel
• Staying Active
• Maintaining meaningful friendships
• Reflections on life and the need to or the lack of ability or ability to tell one’s own story
• Generational responsibility—taking care of elderly parents while dealing with one’s children

“Women and Alzheimer's disease: The Caregiver's Crisis

The results of a new survey released earlier this year, by Working Mother Media highlights the growing number women serving as a primary caregiver for a family member with dementia.

The Alzheimer's Association® acted as a knowledge partner on the survey, “Women and Alzheimer's disease: The Caregiver's Crisis,” which reveals the increasing demands on women to balance career, parenthood and caregiving.

• More than half of caregivers had to adjust their work schedules to accommodate caregiving and 39 percent passed up a promotion.
• 55 percent of caregivers are not saving for retirement.
• 65 percent of caregivers have not had a vacation in the past year.

As we learned from The Shriver Report: A Woman’s Nation Takes on Alzheimer’s, these competing priorities have severe consequences on a woman’s financial, emotional and physical health. Heather Snyder, Ph.D., senior associate director, Medical and Scientific Relations, Alzheimer’s Association, said, “We cannot think of Alzheimer’s as a disease on one person. Every area of a caregiver’s life is affected: her job, her relationships, her children and even her own health.”

The survey results reveal that 49 percent of current caregivers feel overwhelmed. The Alzheimer's Association provides information, support and resources to caregivers in need. Visitors to the new Alzheimer's and Dementia Caregiver Center can access:

Practical caregiving tips for every stage of the disease.

• Advice on how to manage a wide range of caregiving issues, from daily care to safety issues to planning for the future.
• Information on managing stress and coping with emotions related to caregiving.
• Information on local support groups and AlzConnected, an online community for people with the disease and their caregivers.

If you are a caregiver, tell us how we can help you by filling out this survey. We also encourage you to visit the Alzheimer's Association website for support and information on how to care for individual with Alzheimer's disease while maintaining your own well-being.

The Alzheimer’s Association is the world’s leading voluntary health organization in Alzheimer’s care, support and research. Our mission is to eliminate Alzheimer’s disease through the advancement of research; to provide and enhance care and support for all affected; and to reduce the risk of dementia through the promotion of brain health. Our vision is a world without Alzheimer’s disease.