Pensionsåldersutredningen GOVERNMENT COMMISSION FOR LONGER WORKING LIFE AND RETIREMENT AGE Measures for a longer working life (SOU 2013:25) Helsingfors 22 May 2013

Pensionsåldersutredningen WHEN WE LIVE LONGER, WE MUST WORK LONGER An increasing share of older people have good health, higher education and better cognitive capacities, they can and would like to have a longer working life Unless the retirement behavior changes pension levels will be too low, which will threaten confidence in the pension system The dependency burden becomes unsustainable for those who are working Difficult to maintain an acceptable standard in our welfare system Risk for labor shortages

Pensionsåldersutredningen WHY WE NEED MEASURES The idea was that pension reform, tax incentives and major information initiatives etc. should lead to a longer working life Despite some positive tendencies in employment levels, the changes have been modest and do not match increases in life expectancy More older people want to work longer, but are not able because of different obstacles

Pensionsåldersutredningen SWEDEN STILL HAS A DE FACTO NORMAL RETIREMENT AGE OF 65

Pensionsåldersutredningen CA 50 PROPOSALS TO INCREASE EFFECTIVE RETIREMENT AGE Strengthen older people’s ability and resources to work longer Improving work conditions and environment Strengthening measures against age discrimination Better conditions for training and upgrading skills Guarantee Pensioners should benefit from longer working life Government-social partners discussion on occupational pensions and flexible working hours Information needs to be developed A coherent strategy for synchronized age limits “Recommended retirement age” which follows average life expectancy Regulated in Law and calculated annually, most age limits linked to this “recommended retirement age”

Pensionsåldersutredningen IMPROVE THE WORK CONDITIONS AND ENVIRONMENT Strengthening development efforts at the Swedish Work Environment Agency Resources for development and follow-up of “Systematic work environment management (SWEM)” Investment in research and evaluations Training for “Safety representatives” and managers Programs to disseminate knowledge about how work places can be adapted to older workers Resources for intervention studies

Pensionsåldersutredningen BETTER CONDITIONS FOR TRAINING AND UPGRADING SKILLS Student loans 40 weeks also for persons aged Special student grants 961 SEK / month for 40 weeks for persons aged Better access to adult vocational training and adult education Customize courses to older workers demand Resources to the Public Employment Services for career advice to older worker Increased opportunities for labor market training for older worker

Pensionsåldersutredningen GUARANTEE PENSIONERS TO ALSO BENEFIT FROM LONGER WORKING LIFE 30 % of all pensioner, 50 % of women, are caught in a poverty trap People with low income-related pensions can not improve their economic standard by working longer Incomes earned after 65 should not affect the guarantee pension or the housing benefit People with fewer than 40 years of residence must be able to “work to collect” more insurance years

Pensionsåldersutredningen NEW RECOMMENDED RETIREMENT AGE LINKED TO AVERAGE LIFE EXPECTANCY A clear, non-choice alternative for the retirement of older people who wish to achieve an adequate pension level Calculated annually by the Swedish Pensions Agency, decided by the Government Applied 4 years after implementation, implemented 2015 and applied 2019 All age limits in the pension system and other related insurance systems linked to recommended retirement age

Pensionsåldersutredningen RECOMMENDED RETIREMENT AGE 2019 – 2035 Preliminary calculations CalculatedImplementedRec retirement age Källa: Pensionsmyndigheten och utredningens beräkningar

Pensionsåldersutredningen AGE LIMITS IN THE PUBLIC PENSIONS AND RELATED SYSTEMS WILL BE LINKED TO THE RECOMMENDED RETIREMENT AGE The 61-year age limit for early retirement will be raised to 62 years in 2015, and according to current forecasts, to 63 years in 2019 The 65-year age limit for the guarantee pension, sickness compensation and other benefits will be raised to 66 years in 2019, according to current forecasts The age limit referred to in the Employment Protection Act will be raised from 67 to 69 in 2016 The 55-year age limit for occupational and private pensions will be raised in 2017 to 62 years

Pensionsåldersutredningen CHANGES IN RETIREMENT AGE INCREASES LABOR SUPPLY Research review of the effects of changes in retirement age in other countries (Gabriella Sjögren Lindquist) Reforms in Norway ( ), Portugal ( ), Australia ( ), United States (2000 -), Switzerland ( ) and Austria ( ) The effective retirement age and withdrawal of pensions increased by 20 to 50% of a change in the retirement age Some spillover to other social insurance programs

Pensionsåldersutredningen INCREASED LABOR SUPPLY REDUCES THE DEPENDENCY BURDEN Alternative 1. Number of people in labor force increases as much as the population (15-64 year). Alternativ 2. Number of people in labor force decreases as much as the population in , 0.3 per cent per year. Source: Pensionsmyndigheten 0,2 = 20 % of older people work another year 0,35 = 35 % of older people work another year 0,5 = 50 % av of older people work another year

Pensionsåldersutredningen Income Of which - increased age limits in pensions increased age limits for social contributions Expenditures Of which - working environment, training, information etc social insurance etc Net for public finances IMPROVED PUBLIC FINANCES Medium scenario, labor supply increases 35 %. Phased in four years Source: SCB, FASIT-beräkningar, Pensionsmyndigheten, Försäkringskassan och egna beräkningar

Pensionsåldersutredningen EFFECTIVE RETIREMENT AGE IN INCOME STATISTICS. Cohorts Per cent CENTRAL GOVERNMENT OFFICIALS LOCAL AND REGIONAL GOVERNMENT PRIVATE SECTOR WORKERS PRIVATE SECTOR OFFICIALS WOMEN Before and later MEN Before and later A person is considered to have left the labor market the year when earned income is permanently lower than the pension base amount. Källa: SCB, LINDA