New supplementary pension agreement for government employees

In December 2001, a new collective agreement was signed on supplementary pensions for the 220,000 employees in the Swedish government sector. The new pensions system gives employees greater control over where their pension contributions are invested.

On 21 December 2001, the Agency for Swedish Government Employers (Arbetsgivarverket) and trade unions representing government employees signed a new collective agreement on supplementary pensions. The trade union bodies concerned were the Swedish Union for Service and Communication (Facket för Service och Kommunikation, SEKO), the Public Employees' Negotiation Council (Offentliganställdas förhandlingsråd, OFR) and the Swedish Confederation of Professional Associations (Sveriges Akademikers Centralorganisation, SACO). The agreement creates a new 'premium' contribution-based collective supplementary pension system - ie whereby workers' pensions are based on the contributions that they themselves make - for the 220,000 workers in the government sector, with possibilities for individual choices for the employees. The new system will progressively replace parts of the current 'benefit-contribution' based system - whereby fixed benefits are paid out of current contributions - and will come into force on 1 January 2003. Those employees with five years or less until retirement are not concerned by the new system, with the exception of the possibility of receiving a partial pension (see below).

According to Arbetsgivarverket, the new system gives employers better control over future pension costs while employees will have greater opportunities to influence their own pensions through placing parts of their pay in different schemes. Under the new scheme, employees will start to gain pension rights from the age of 23. The employer will make a contribution corresponding to 2.3% of the employee's salary, which the employee can choose to place in a pension fund or a traditional life insurance scheme. The employer will set aside a further 2% of pay for the joint administration of the pension system.

From 1 January 2003, government employees will also be able to take a partial pension from 61 years of age, in line with the rules in the recently introduced new state pension system (SE9811120F), whereby an employee now may choose to retire, fully or partly, from the age of 61.

Swedish pensions provision is built on three different elements - the state pension system, collectively agreed pensions and individual pension savings. The state pension system consists of an income-related pension, a 'premium' pension (a quite recent item, which allows individuals to put a relatively small part of their income into a unit trust) and a 'guarantee' pension. The latter is for those citizens who have received too small an income to obtain a right to an income-related pension. Almost all Swedes, having been employees, receive on top of the income-related pension a supplementary collectively agreed pension. People who so wish may save for an individual pension privately, with no other parties involved than themselves and a private insurance company.

In spring 2001, new supplementary pension agreements were signed for employees of local municipalities and county councils, as part of their new pay agreements. Their new pension agreements run from 1 April 2001 and include provisions such as a reduction in age at which pension rights start to be accrued, to 21 years instead of 28, and an employer's contribution of 4% of pay. In the private sector, a new supplementary pension agreement was concluded in 2000 for blue-collar workers (SE0002121N). On behalf of private sector white-collar workers, the Federation of Salaried Employees in Industry and Services (Privattjänstemannakartellen, PTK) negotiated with employers on this issue for some seven years before the talks failed in 1999 (SE9908180F). New preparatory talks restarted during 2001 (SE0104192N), but by early 2002 no real negotiations had yet begun.