Last lessons learned from the Swedish public pension system

Retirement systems across the world are undergoing major reforms to adapt to continuously changing economic and demographic factors. Among these major changes are the so-called notional defined contribution pension schemes (NDCs), first developed about 20 years ago in countries such as Italy, Latvia, Poland and Sweden. These pension schemes attempt to reproduce the logic of a financial defined contribution pension plan within a pay-as-you-go framework. Among the countries with NDCs, Sweden is the only one where an automatic balancing mechanism goes hand in hand with the prior calculation of a financial solvency indicator that emerges from an actuarial balance sheet. This chapter describes the Swedish pension experience over the 2007-2015 period through its accounting method, together with the problems faced by the system and the policy responses.