Pensions à la carte

Published on 11 June 2010 at 14:58

Retirement age is increasingly one of the main subjects of political debate in Europe. Age 65, which is the current threshold in a majority of countries, including Germany, Ireland and Spain, has been cited as a norm, particularly in countries where retirement is very low, as it is France. In many cases, reformers are even advocating a working life that continues until age 67. And it is this figure that has mobilised demonstrators across Europe, who are determined to oppose what they see as more than an attempt to undermine the right to a decent pension, but an attempt to undermine the right to any pension. Their reasoning is quite simple: in many countries, particularly in Eastern Europe, the proposed limit is uncomfortably close to the average life expectancy. How can a retirement age of 67 not be perceived as a threat when life expectancy is 68?

The pension reform packages that have sparked a public outcry and huge protests in the streets of Bucharest, Lisbon and Athens, are greeted with wry smiles by the Swedes. "We spent eight years overhauling our pension system, from 1990 to 1998," explains Ole Settergren, director of Swedish Social Insurance Agency's Office of Pensions. "Before we began, we made sure that we had support from all of the parties. The reform was not very popular, but it was accepted." Like other Nordic countries, Sweden benefits from the reputation of being "a good place to live." As one Romanian journalist put it, "We would all like to be Swedish." And as they often do in times of crisis, whether it be the financial crisis prompted by subprime mortgage backed securities or the social crisis prompted by austerity measures, Europe's member states are looking to Sweden and "its model welfare state" for inspiration.

Notwithstanding the long gestation period for the reform in the 1990s, the Swedish pension system remains remarkably simple: minimum retirement age is set at 61, and pensioners can benefit from a range of options in what has been dubbed "à la carte" retirement. Those who retire at 61 will be entitled to a pension, though it will not be as substantial as the one they could obtain if they continued working. Those who realise that their pensions do not provide them with sufficient income are given the option of returning to work. The exact amount of a given pension takes into account salary earned since the applicant began working, and the current average salary and life expectancy in the country. Representatives of several European governments have already visited Stockholm in search of ideas to break the deadlock in their own countries. But these fact-finding missions have failed to produce much in the way of results. The paradox of the Swedish model is that everyone envies it, but no one, it seems, is willing to adopt it.

Iulia Badea-Guéritée

Are you a news organisation, a business, an association or a foundation? Check out our bespoke editorial and translation services.

Support independent European journalism

European democracy needs independent media. Voxeurop needs you. Join our community!