SWEDEN - Nearly half of Sweden's population are unaware of how much they will receive in state pension when they retire, a recent survey shows.
The survey found that as many as 46% of 16 to 69 year olds in Sweden did not know how much of their current salary that they would receive in state pension.
Unawareness about the pension system was particularly apparent amongst young people. The survey found that 78% of 16 to 24 year olds had no idea of what their pension pay outs would be, compared to 39% of 40 to 69 year olds.
The survey was conducted by Hermelin Nordic Research for the Swedish banking and insurance alliance Länsförsäkringar Alliance.
Peter Säll (pictured), deputy director at Länsförsäkringar Alliance, described the figures as alarming.
The lack of knowledge about the pension system is worrying,” he said. “Of course it is natural not to think about your pension until you reach a certain age. However, the fact that as many as 78% of 16 to 24 year olds don't know anything about the [pension] levels shows a failure to inform. Sweden's state pension is a combination of a PAYG notional DC scheme, and privately managed DC accounts managed through the Premium Pension System.
Employees receive about 60% of their final salary in retirement, made up of social security payments, and earnings from the Premium Pension System. For many it is necessary to supplement their state pension with private savings in pension funds.
Fifty-four percent of Sweden's total population are today covered by private pension schemes. However, Peter Säll said more people would invest in private schemes if they were more aware of how the current pension system works. He said many Swedes will be surprised when they realise how little they will receive in state pension when they retire.
People are likely to be disappointed when they only get 60% of their final salary in their first pension year,” Säll said. “I think many expect they will get more.
He added that the introduction of the defined contribution system was partly to blame for people's lack of understanding.
It can be tough material to comprehend, he said and called for more information about pensions at schools:
We suggest that the elementary schools should inform young people about how the pension system is structured and how it works for individuals. Perhaps the insurance companies and banks in Sweden could provide the schools with teachers who can educate the students about pensions, he said.
By Andreas Walstad
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