How Will Sweden’s New Pension System Work?

Annika Sundén

IB#3

Introduction

In 1998, the Swedish Parliament passed pension legislation that transformed Sweden’s Social Security system to a Notional Defined Contribution (NDC) plan ¾ that is, a defined contribution plan financed on a pay-as-you-go basis. In addition, the legislature established a second tier of funded benefits. This Issue in Brief describes the evolution of the new Swedish pension system and discusses its implications for other countries considering pension reform…