Despite good returns, pensions are only growing marginally. The pension system has been turned into a political tool instead of a security for those who have worked all their lives," says Bo Hansson, deputy party leader of Ambition Sverige.
The Swedish income pension system should provide pensioners with better pensions. Instead, large parts of the pension capital have been used to fill holes in the treasury and to invest in risky, green climate projects. We want to make the income pension more self-owned and raise the basic deduction substantially - to two price base amounts - so that pensioners can get the reward for their work that they should be entitled to.
Pension provision The income pension is the employee's savings for their own pension. Each month, a salary-based sum is set aside and the capital is then managed primarily by the AP funds' portfolio managers - but then politics comes in.
The income pension capital of the AP funds grows with the return on the funds' securities investments, but the actual return is not passed on to pensioners - because the amounts paid out in pensions are determined by a given formula based on an income index and not on the return itself.
During the period 2001-2024, employees' inkomstpension capital grew on average by about 6.3% per year. What was paid out to pensioners increased by an average of 3.1% per year. The difference between the two? It remained in the buffer funds and could be used for policy initiatives.
Ambition Sverige wants to make the national income pension more owner-occupied and increase the basic deduction substantially - then Swedish pensioners will get their rightful reward for their work.
The premium pension, measured on the basis of AP7's Såfa fund, grew by an average of 7.8 per cent per year during the same period. The difference lies in a larger proportion of equities, but also the absence of politically driven investments in utopian green projects such as Northvolt - which cost pensioners nearly SEK 6 billion. The premium pension provides higher earnings, which in turn increases pensions.
Ambition Sverige wild that the self-owned premium pension share in the income pension system should increase to at least half of the 18.5 per cent set aside for pensions each month. Today, 2.5 per cent of the 18.5 per cent is allocated to the premium pension. With half in premium pension, both the pension capital would grow more and the risk of large losses in politically controlled green risk investments would decrease.
As the change to an increased premium pension would probably take a few years to implement, we propose a faster income improvement for pensioners. Looking around at other countries, it appears that Germany, for example, has a significantly higher basic deduction (Grundfreibetrag EUR 12,096 for single people, equivalent to around SEK 132,000) for pensions. Sweden should be closer to this and therefore it is reasonable to increase the basic deduction for pensions.
Raising the basic deduction on pension income to two price base amounts - instead of the current increased SEK 65,300 for low incomes - would increase pension income by almost SEK 1,500 per month after tax. Such an upward adjustment makes a real difference and could be implemented quickly, if the political will exists.
Thus, Ambition Sverige wants to make the national income pension more self-owned and increase the basic deduction substantially - then Swedish pensioners will get their rightful reward for their work.
Bo Hansson, Pensions Policy Spokesperson & Deputy Party Leader Ambition Sverige | Montage of photos from Depositphotos.com and T. Sassersson