Invalidity, Old-Age and Survivors' Benefits Convention, 1967 (No. 128) - Sweden (Ratification: 1968)

Direct Request (CEACR) - adopted 2023, published 112nd ILC session (2024)

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In order to provide a comprehensive view of the issues relating to the application of the ratified Conventions on social security, the Committee considers it appropriate to examine Conventions Nos 102 (social security, minimum standards), 121 (employment injury benefits), 128 (invalidity, old-age and survivors’ benefits), 130 (medical care and sickness benefits) and 168 (employment promotion and protection against unemployment) together.

The Committee notes the observations of the Swedish Confederation for Professional Employees (TCO) communicated with the Government’s report on Convention No. 130.

The Committee takes note of the information provided by the Government regarding the application of Articles 8, 10(1)(3), 14, 15, 24(4), 43, 69 and 71(3) of Convention No. 102; Articles 6, 9(1)(2), 10, 11, 16 and 22 of Convention No. 121; Articles 18, 23, 29 and 32 of Convention No. 128; Articles 7, 9, 13, 19, 28 and 30 of Convention No. 130; and Articles 18 and 26 of Convention No. 168.

Article 9(3), in conjunction with Articles 14(2) and 22 of Convention No. 121. Duration of employment injury benefits. The Committee takes note of the Government’s indication in its report that the work injury annuity is provided up to the age of 65 at the latest, or one month before reaching the age of 68 if a person continues to work. The Committee recalls that Article 9(3) of the Convention requires the benefits to be granted throughout the contingency. The Committee further recalls that Article 22 of the Convention does not provide for the possibility to suspend the benefits upon reaching a certain age. The Committee requests the Government to provide information on: (i) the benefits provided to injured persons after they have reached the age of 65 and stopped working; (ii) whether these benefits are paid at the level required by Article 14(2) of the Convention; and (iii) whether there are any qualifying conditions for the entitlement to such benefits.

Article 19(2) of Convention No. 121. Calculation of employment injury benefits. The Committee takes note that the amount of the work injury annuity is determined based on the sickness benefit qualifying income (SGI). The Committee further notes that the SGI is considered as an income from employment which is expected to last for at least six consecutive months, according to section 3(2) of Chapter 25 of the Social Security Code of 2010. The Committee requests the Government to provide information on how the SGI is determined for persons with employment shorter than six months in case of permanent loss of earning capacity or corresponding loss of faculty due to employment injury.

Article 15(3), in conjunction withArticles 17(a), 18(1)(a) and 26 of Convention No. 128. Reduction of pensionable age. The Committee notes the Government’s indication that there are no specific provisions concerning the retirement age of persons who have been engaged in arduous and hazardous occupations under the public pension system. The Committee further notes that the retirement age for the old-age income pension is flexible and starts at the age of 63 in 2023 (section 3 of Chapter 56 of the Social Insurance Code of 2010). The Government also indicates that from 2026, the retirement age will be linked to the increase in life expectancy. The Committee requests the Government to indicate the replacement rate of the old-age income pension drawn at the earliest retirement age, by a skilled manual male employee who has completed 30 years of contribution or employment, in accordance with Titles I and III of the report form for Article 26 of the Convention.

Article 23(a), in conjunction with Articles 24(1)(a) and 26 of Convention No. 128. Replacement rate of survivors’ benefits. The Committee notes the Government’s indication that the adjustment pension provided to a surviving spouse is 55 per cent of the deceased’s pension base. In addition, the reduced guarantee pension is provided to persons who have resided in Sweden for at least three years. The Government further indicates that the child pension is equal to 35 per cent of the deceased’s pension base for one child and increases by 25 per cent for each additional child. The child pension may be supplemented by the surviving children’s allowance of 40 per cent of the price base amount in case the child pension is low. The Committee requests the Government to calculate the replacement rate of survivors’ benefits provided to a standard beneficiary (a surviving spouse with two children) in case the deceased spouse completed 15 years of contribution or employment, in accordance with Titles I and IV of the report form for Article 26 of the Convention.

Article 25, in conjunction with Articles 1(h) and 21 of Convention No. 128. Duration of survivors’ benefits. The Committee notes the Government’s indication that the adjustment pension is provided to a surviving spouse aged under 65 for a period of 12 months, or as long as the surviving spouse lives with a dependent child aged under 12. The Committee recalls that the right to a survivors’ benefit is provided to surviving spouses who are caring for a dependent child of the deceased (Article 21(2)(3)(b) of the Convention). According to Article 1(h) of the Convention, the term “child” covers a child under school-leaving age or under 15 years of age, whichever is higher or a child who is an apprentice or student or has a chronic illness or infirmity disabling him/her for any gainful activity, under prescribed conditions. The Committee requests the Government to provide information on the measures taken to extend the duration of the adjustment pension provided to a surviving spouse who is caring for a dependent child older than 12 years of age.

Article 15 of Convention No. 102 and Article 19 of Convention No. 130. Coverage of the self-employed. The Committee notes the Government’s indication that the conditions for entitlement to sickness benefits are the same for self-employed persons and employees. The Committee further notes the TCO’s observations indicating that the entitlement to sickness benefits and their amount depend on the verification of the SGI by the National insurance board. In this respect, the TCO points out that such verification is particularly problematic for self-employed persons, whose SGI is often much lower than their actual income. The Committee requests the Government to provide information on the measures taken or envisaged to ensure that self-employed persons are entitled to benefits based on the SGI determined from their actual income.

Article 11(1) of Convention No. 168. Persons protected by unemployment benefits. The Committee notes that in its 2022 conclusions on the application of the European Code of Social Security by Sweden, it noted as regards the income-loss insurance coverage that 78 per cent of the work force held membership in the unemployment insurance funds. The Committee requests the Government to provide information on the measures taken or envisaged with a view to increasing the income-loss insurance coverage up to at least 85 per cent of all employees. It further requests the Government to provide statistical data on the number of persons covered by the income-loss insurance.

Article 15 (1)(b) of Convention No. 168.Replacement rate of unemployment benefits. The Government indicates that a daily basic amount of unemployment benefit is SEK510 (approximately €43) in 2023. The Committee requests the Government to indicate whether the basic amount of the unemployment benefit is fixed at not less than 50 per cent of the statutory minimum wage, if it exists, or of the wage of an ordinary labourer, or at a level which provides the minimum essential for basic living expenses, whichever is the highest.

Direct Request (CEACR) - adopted 2017, published 107th ILC session (2018)

The Committee has examined the reports on the abovementioned Conventions received in 2016, as well as the 50th annual report on the application of the European Code of Social Security received in 2017 and the Consolidated report (CR) on the application of the Code and certain ILO social security Conventions ratified by Sweden (Conventions Nos 12, 102, 121, 128, 130, 168) for the period 2006–16. The Committee has also taken note of the observations submitted in August 2016 by the Swedish Trade Union Confederation (LO), the Swedish Confederation for Professional Employees (TCO), and the Swedish Confederation of Professional Associations (SACO) concerning the application of Conventions Nos 102 and 130.

Part II of the CR (Medical care). Articles 8 and 69 of Convention No. 102 and Article 7(a) of Convention No. 130. Contingencies covered. The Committee requests the Government to confirm that medical care includes preventive care, is provided for “any morbid condition, whatever its cause”, and is not limited to emergency care only in certain cases such as, for example, in cases of attempted suicide, intoxication by alcohol or drugs, participation in a fight, etc.

Article 10(1) of Convention No. 102 and Article 13 of Convention No. 130. Types of medical care. The Committee requests the Government to indicate what types of medical care are covered by the public health insurance, in particular with respect to domiciliary visiting, dental care, medical rehabilitation, supply, maintenance and renewal of prosthetic and orthopaedic appliances, and specify how the list of “the essential pharmaceutical supplies” is established in Sweden.

Article 10(3) of Convention No. 102; Article 9 of Convention No. 130. Objectives of medical care. The Committee requests the Government to state how the objectives of medical care are defined.

Part III of the CR (Sickness benefit). Article 14 of Convention No. 102; Article 7(b) of Convention No. 130. Contingency covered. The Committee requests the Government to indicate the definition of “sickness” and “capacity to work” established in the national legislation.

Article 15 of Convention No. 102; Article 19 of Convention No. 130. Coverage of the self-employed. The Committee notes that persons protected under Convention No. 102 are defined by reference to its Article 15(b), which covers classes of the economically active population, including self-employed. The Committee requests the Government to provide information on the conditions of entitlement and level of benefit of self-employed persons under the national legislation.

Article 71(3) of Convention No. 102; Article 30 of Convention No. 130. Due provision of benefits. The CR states that for the first 14 days of illness the responsibility to pay sick pay is on the employer, from the 15th day of the sickness cash benefit is paid by the Swedish Social Insurance Agency. The Committee requests the Government to indicate how the payment of sickness benefit to the beneficiary is ensured in case of the employer’s failure to pay.

Part IV of the CR (Unemployment benefit). Article 24(4) of Convention No. 102; Article 18 of Convention No. 168. Waiting period. The Committee requests the Government to indicate the measures taken or envisaged to reduce the waiting period for unemployment benefit to the first six calendar days.

Article 26 of Convention No. 168. Special provisions for new applicants for employment. The Committee requests the Government to specify what categories of new applicants for employment among those listed in Article 26(1) of Convention No. 168 are protected by the national legislation. The Committee requests the Government to indicate the nature and conditions of social benefits provided to these categories.

Part V of the CR (Old-age pension). Article 15(3) of Convention No. 128. Reduction of pensionable age. The Committee requests the Government to indicate the pensionable age established for the persons engaged in occupations deemed to be arduous or unhealthy.

Article 18 of Convention No. 128. Minimum qualifying period. The Committee requests the Government to indicate the length of the qualifying period required for obtaining the full and the reduced old-age pension benefits and confirm that, in calculating the replacement rate of the old-age benefit for the standard beneficiary (man with wife of pensionable age), the income related pension of the husband is calculated on the basis of 30 years of insurance and the guaranteed pension for the wife – on the basis of 20 years of residence.

Part VI of the CR (Employment injury benefits). Insufficient information. In its direct request of 2011 on Convention No. 121, the Committee requested the Government to include in its next report due in 2016 detailed information requested in the report form on the status of application in law and practice of the provisions of the following Articles of the Convention: 8 (list of occupational diseases); 9 (conditions of entitlement to benefits); 11 (offsetting of the cost of medical care); 14 (prescribed degrees of incapacity); 15 (lump sum compensation); 16 (helper’s allowance), 17 (review of incapacity); 22 (grounds for the suspension of benefits); and 26 (prevention, rehabilitation and placement services). The Committee observes that the report of 2016 provided clear answers on the status of application of Articles 8, 14, 15 and 16, stating that there is no list of occupational diseases, no degrees of incapacity in work injury insurance, no lump sum compensation, and no helper’s allowance in the insurance scheme. The Committee points out that such answers suggest that these Articles might not be applied in the national law and practice. The Committee also observes from the CR that the information supplied by Sweden since 2006 with respect to employment injury benefits is insufficient to conclude on the application of a number of other provisions of the Convention mentioned below. This concerns in particular medical care and sickness benefit, which are provided in case of employment injury not by the work injury insurance but by other insurance schemes having different conditions of entitlement, on which the required information is also lacking in the reports on Convention No. 130. The Committee notes in this respect that the LO, the TCO and the SACO point out in their observations concerning Convention No. 118 that an EU citizen who plans to work in Sweden for less than one year has difficulty gaining access to health care in Sweden, and that a governmental investigation is currently analysing the Swedish legislation’s coherence with international standards. In view of the insufficient information available, the Committee requests the Government to indicate in detail the manner in which effect is given to all Articles of Convention No. 121.

Reform of the work injury insurance. The TCO points out in its observation that work injury insurance has become increasingly under debate and the inquiry has been launched for a more equal and legally secure occupational injury insurance (dir. 2016: 9), but the Government’s report does not contain any account of the application of the existing legislation in practice. In this respect, the SACO and the TCO highlight a dramatic decrease in the number of approved life annuities by the Swedish Social Insurance Authority from 7,375 in 2008 to 2,009 cases in 2015, which cannot be explained by a better working environment and a healthier population. The TCO also points out that the requirement to prove that the reduction in the working capacity is expected to last at least one year for being entitled to insurance compensation, effectively means that many victims of employment injuries stand without compensation. In this respect the Government’s report of 2016 states that annuity can be granted if the incapacity for work is deemed to be lasting a year or more and is reduced by one fifteenth. The Committee requests the Government to reply in detail to the observations made by the trade unions. The Committee requests the Government to describe the objectives and the findings of the abovementioned inquiry for a more equal and legally secure occupational injury insurance and add a general appreciation of the manner in which Convention No. 121 is applied in Sweden, including for instance extracts from official reports as well as information concerning the practical difficulties encountered in the application of the Convention, in accordance with Part V of the report form.

Article 6 of Convention No. 121. Contingency covered. The Committee requests the Government to explain how the work injury insurance compensates the loss of income in cases where the working capacity is reduced by less than one quarter.

Article 9(1)(2) of Convention No. 121. Qualifying period. The Committee requests the Government to confirm that there is no qualifying period for entitlement to each benefit provided in case of employment injury. In this connection, the Committee notes from the observations made by the TCO that according to existing legislation only incomes that are predicted to last at least six months may be included in the calculation of sickness benefits. According to the TCO, this effectively means that employees with employment shorter than six months are not eligible for sickness benefits. The Committee asks the Government to explain how employees with employment shorter than six months are protected against incapacity for work resulting from employment injury.

Article 9(3) of Convention No. 121. Duration of benefit. The Committee requests the Government to confirm that employment injury benefit is paid throughout the contingency and to indicate whether there is a waiting period in respect of incapacity for work.

Article 10 of Convention No. 121. Medical care and allied benefits. The Committee requests the Government to confirm that medical care includes in particular types of care specified in points (c)(e)(f)(g) of Article 10.

Articles 11 and 16 of Convention No. 121. Cost-sharing and avoidance of hardship. According to the CR, the same rules of cost-sharing are applied regardless if there has been a work injury or not. The Committee requests the Government to demonstrate that the rules of cost sharing applied under the general health insurance scheme would not cause hardship for the standard beneficiary (a family of four persons) in case of a long term hospitalization and medical rehabilitation after a severe employment injury requiring the constant help of another person over the period of one year.

Part VII of the CR (Family benefit). Article 43 of Convention No. 102. Length of the qualifying period. According to the CR, all children residing in Sweden are covered by the child allowance. The Committee requests the Government to confirm that a child ordinarily residing in Sweden for six months will be automatically entitled to the child allowance.

Part IX of the CR (Invalidity benefits). In its reports, the Government refers to two benefits paid in the event of incapacity for work: the activity compensation paid for a maximum of three years during the period of incapacity from 19 to 29 years of age, and the income-related sickness compensation paid until the achievement of pension age during the period of incapacity from 30 to 64 years. The Committee requests the Government to confirm that Part IX is applied to these two benefits, which together constitute Invalidity benefit in terms of Part IX, and demonstrate how they complement each other to ensure protection throughout the contingency in case full invalidity has been acquired at the age of 25 years.

Part X of the CR (Survivors’ benefit) Article 23 of Convention No. 128. Calculation of benefit. The Committee notes that the calculation of the survivors’ benefit is done on the basis of the adjustment pension and the child pension. The Committee requests the Government to explain the rules of calculation of these two benefits and provide calculations in case the breadwinner had completed only 15 years of insurance.

Part XI of the CR (Standards to be complied with by periodical payments). Article 29 of Convention No. 128. Adjustment of the old-age, invalidity and survivors’ benefits to the cost of living. The Committee requests the Government to provide statistics requested in the report form under this Article for the period 2011–17 and explain the Government’s policy in this regard.

Part XIII of the CR (Common provisions). Article 69 of Convention No. 102; Article 22 of Convention No. 121; Article 32 of Convention No. 128; Article 28 of Convention No. 130. Suspension of benefit. The Committee requests the Government to indicate how these provisions are applied in national law and practice with regard to medical care, sickness benefit, old-age benefit, employment injury benefit, family benefit, maternity benefit, invalidity benefit, and survivors’ benefit. Recalling that sickness, invalidity and unemployment benefit schemes are subjected to the common labour market activation rules with a view to increasing the employment rate, the Committee requests the Government to explain the regime of sanctions applied in cases of refusal to participate in prescribed activation measures.

Direct Request (CEACR) - adopted 2004, published 93rd ILC session (2005)

The Committee notes that the Government’s report has not been received. It hopes that a report will be supplied for examination by the Committee at its next session and that it will contain full information on the matters raised in its previous direct request, which read as follows:

The Committee notes the information provided by the Government in its report, as well as its reply to the Committee’s previous comments. It has also taken into account the information contained in the annual reports on the application of the European Code of Social Security by Sweden.

1. Pension reform. The Committee notes the important changes brought to the old-age, invalidity and survivors’ benefits by the pension reform adopted by the Parliament in 1998, which has introduced such new concepts as basing pensions on lifelong earnings, including income from employment, business activities and social security benefits; crediting of amounts for periods of child care, national service and disability for which pension contributions are paid in full by the State or the relevant social insurance scheme; flexible retirement age with no upper age limit; indexation of pensions to real income growth; guaranteed state pensions for those who have not earned pensions considered to be sufficient; calculating actual pension with regard to the remaining life expectancy of the person concerned; possibility for the capital accumulated in individual savings accounts to be claimed in the form of a pre-funded pension or used for investment in security funds; transferability of pre-funded pension rights between married or registered partners, etc. The new pension system includes three components: (1) PAYG public pension scheme providing income-related pensions, which have replaced a former national supplementary pension (ATP); (2) premium reserve funds providing a pre-funded pension financed from the savings on individual pension accounts; and (3) a guaranteed pension provided from the state budget as basic security for low income earners, which has replaced the former basic pension (FP). Out of the total pension contributions representing 18.5 per cent of the individual’s lifetime income, 16 per cent is used to finance pension payments under the PAYG scheme in the same year, while 2.5 per cent is saved and earns interest in an individual premium reserve account. While the old supplementary pension system was a typical defined benefit system, the reformed PAYG scheme and the premium reserve scheme are defined contribution schemes. The reformed old-age pensions system, which came into force on 1 January 1999, is being introduced gradually over an extended transitional period. Those born in 1937 and earlier will receive their ATP pension entirely according to old rules. Those born between 1938 and 1953 will have part of their pension calculated according to the rules of the old system and part according to the new rules, subject to a special guarantee rule that they will be entitled to at least the pension they have earned under the old rules up to the adoption of the pension reform by Parliament in 1994. Those born in 1954 or later will receive pensions entirely according to the new rules. The first payment under the reformed old-age pension system took place in January 2001.

The reform of the old age-pension was followed by changes in other social security branches. The new legislation on survivors’ pensions and support for children adopted in 2000 will enter into force from 1 January 2003, together with other laws related to the pension reform in Sweden. Under this legislation, the text of which has been supplied by the Government, the special survivors’ pension will be abolished, while the adjustment pension will be paid to a surviving spouse who at the time of the death of the other spouse lived together with a child under 18 years of age, instead of 12 years as before. In the spring of 2001, the Government put forward proposals designed to bring existing disability pensions into line with the new old-age pension system and the new rules are expected to enter into force from January 2003. A further government proposal to reform work injury insurance was to be presented in the autumn of 2001. Furthermore, a new Social Insurance Act, the text of which has been also supplied by the Government, entered into force on 1 January 2001 and divided the social security system (except unemployment insurance) into two parts: a residence-based insurance scheme providing guaranteed amounts and benefits and a work-related insurance scheme against loss of income. The dividing line corresponds largely to the difference between contributory and non-contributory benefits schemes. Both categories of benefits apply equally to all persons regardless of nationality who are habitually resident or work in Sweden. Work-related benefits are no longer related to residence in Sweden and the Act contains provisions on work, studies or stays abroad.

The Committee takes due note of this information. It notes that the reform measures have been accompanied by changes in the nature and methods of calculation of certain benefits. Taking into account that many of the new provisions concerning long-term benefits have not yet entered into force, the Committee would like the Government to continue to supply information on the reform process and to present a detailed report on the state of its legislation and practice in the invalidity, old-age and survivors’ benefit branches in 2004. Please also explain the new methods of the calculation of benefits and provide the necessary statistics in the manner requested by the report form on the Convention, together with an English translation of the new legislation, if available.

2. New mechanism for the revision of benefits. Article 29 of the Convention in relation to Parts III (Old-age benefit) and IV (Survivors’ benefit). According to the final report on "The pension reform in Sweden", June 1998, the old benefit formula for calculating pensions demanded an economic growth of approximately 2 per cent annually; with slower growth increased contributions to the system were necessary. While during the 1960s GDP increased by over 3.7 per cent per year, since 1975 average annual growth has been less than 2 per cent. Furthermore, the fluctuations in the business cycle have been increasingly large. The low rate of growth in the past two decades combined with growing instability and an increasing number of pensioners receiving higher pensions has exposed the weakness of the system and the need to reform it. Consequently, the mechanism of the adjustment of pensions has been changed. In the old system, to ensure that pensions did not depreciate as a result of inflation, both earned pension rights and pension payments were adjusted to price trends on the basis of changes in the consumer price index. This was done automatically by indexing the base amount used for the calculation of pensions. However, such indexation of pensions, which maintained their purchasing power in conditions of the decline or very small increase in real earnings in the country, has sharply increased the cost of the pension system for the working population. In the new pension system designed for conditions of low growth, contributions to the PAYG scheme as well as the payouts from that scheme were linked directly to economic growth. In place of price trends the value of pensions shall now follow the development of average income for the working population, so that the costs of the pension system will be automatically adjusted to the overall resources of the national economy. This is done by adjusting the base amount not to changes in the consumer price index but to changes in the new economic adjustment index, which reflects average income growth in the economy.

Thus, as regards the PAYG scheme, if real average income increases, the value of the income-related pension rights will also increase. If real earnings fall, the value of the rights will also decrease; in fact, it may be lower in terms of purchasing power than at the time of payment of the contribution. When the new pension is computed, the pensioner will be credited with an assumed future growth in real wages; the adjustment of the pension will be done subsequently on the basis of how actual growth compares with the assumed growth for this year. At present, indexation of pension payments is based on a notional future growth rate of 1.6 per cent, which is called the "norm". If real growth is equal to the norm, pensions will be adjusted upwards by a percentage equal to that of inflation. If real growth is higher than the norm, pensions will be adjusted upwards by the rise in prices plus the rate of real growth in excess of 1.6 per cent, which will give pensioners not only full compensation for inflation but also a share of the growth in real wages enjoyed by the economically active. However, if real growth is lower than the norm, full compensation will not be made for price increases and inflation, which means that pensions will fall in real terms.

According to the Government, the new adjustment mechanism relates only to old-age pensions and, from 2004, to survivors’ benefits, and that other benefits that were part of the former pension system, such as injury and invalidity benefits, have been separated from the new pension system. These benefits are still recalculated every year in accordance with changes in consumer prices. Furthermore, in the new pension scheme there is a guaranteed pension, which is designed to secure a minimum standard of living for pensioners and is also recalculated every year in accordance with changes in consumer prices. The existence of the guaranteed pension protects not only those with low lifetime incomes in respect of the level of their pensions, it also protects those with the lowest pensions from any decline in the real value of their pensions due to a growth in real wages of less than 1.6 per cent. On the other hand, these individuals will not benefit from any real growth in average wages of over 1.6 per cent. The guaranteed pension is calculated on the basis of the price-related base amount, which is adjusted every year in line with changes in consumer prices. It is reduced to zero for persons receiving a public earnings-related pension worth 3.07 price-related base amounts per year, who are therefore the only category of pensioners fully exposed to the risks of a slower growth in real average wages than 1.6 per cent per year. According to the Government, it is inevitable that pensioners in normal/higher income brackets are exposed to the risk of slow economic growth in view of the size of the earnings-related pension liability, which amounts to 250.6 per cent of GDP. A liability of this order cannot be guaranteed by public funds and the Government/taxpayers cannot guarantee the purchasing power of all earnings-related pensions irrespective of the rate of economic growth in Sweden. The Government considers that the above system represents a good balance between social and financial concerns, which automatically directs more resources to maintaining the purchasing power of low-income pensioners when growth is slack.

The Committee notes this information. It appears from the above explanations that, in difference with the old pension system, which was established in a rapidly and stably growing economy, the new pension system in Sweden is designed to function in conditions of low and unstable economic growth and to absorb the frequent fluctuations in the business cycle, subject to inflation being kept under control. This is achieved by replacing the defined benefit system with the defined contribution system, which permits to contain pension costs by turning the real value of pension assets from a "constant" into a "variable" depending upon the overall economic performance. Changing the adjustment principle from indexation to prices to indexation to real economic growth appears to be the logical consequence of this reform. The new mechanism for the revision of benefits however concerns only one of the three components of the reformed pension system, namely income-related pensions provided by the PAYG scheme. In the premium reserve scheme there is no need to index the pension capital because the interest is straightforward and consists of the yield from investments, while the new guarantee pension, in the same way as the basic pension before it, continues to be pegged to changes in consumer prices, thereby maintaining the purchasing power of pensioners of small means. To better appraise the design of the new pension system, the Committee would like the Government to provide statistics on the number of persons receiving the guaranteed pension in relation to the total number of old-age pensioners in Sweden.

As regards the new adjustment mechanism for income-related pensions, the Committee observes that, where the rate of economic growth in the country over the previous year does not reach the established norm (currently 1.6 per cent), pensions are adjusted downwards, decreasing their real purchasing power at the moment when it particularly needs to be safeguarded. It further notes that during the transitional period until 2030, this "norm" in economic adjustment indexing will be financially important, as the index will also apply to pensions calculated according to the old rules and will directly affect their value. In view of the fact that establishing a relatively high "norm" of economic growth would mean a relatively high risk of successive decreases in the real value of the pension, the Committee would like the Government to explain how this "norm" is determined in order to ensure the most realistic assumption of future economic growth.

Finally, as regards the consequences of the new adjustment mechanism, the Committee notes that, as stated in the final report on "The pension reform in Sweden", "when times are bad, pensioners bear their share of the burden. In good times, they benefit from the rise in living standards" (page 14). The Committee wishes to recall in this respect that the aim of the mechanism of the adjustment of benefits established by Article 29 of the Convention consists both in maintaining the purchasing power of benefits "when times are bad" by adjusting pensions to substantial changes in the cost of living, and raising the standard of living of pensioners "in good times" by adjusting pensions to substantial changes in the general level of earnings. With this in mind, the Committee would like the Government to explain in its next report the manner in which current periodical payments in respect of old age and death of a breadwinner were reviewed and to provide detailed statistics required by the report form under Article 29, for the same time period, based not only on the new economic adjustment index, but also on the traditional cost-of-living indices reflecting changes in consumer prices. As regards old-age benefit, please give data separately for the income-related pension and the guaranteed pension.

[The Government is requested to report in detail in 2005.]

Direct Request (CEACR) - adopted 2002, published 91st ILC session (2003)

The Committee notes the information provided by the Government in its report, as well as its reply to the Committee’s previous comments. It has also taken into account the information contained in the annual reports on the application of the European Code of Social Security by Sweden.

1. Pension reform. The Committee notes the important changes brought to the old-age, invalidity and survivors’ benefits by the pension reform adopted by the Parliament in 1998, which has introduced such new concepts as basing pensions on lifelong earnings, including income from employment, business activities and social security benefits; crediting of amounts for periods of child care, national service and disability for which pension contributions are paid in full by the State or the relevant social insurance scheme; flexible retirement age with no upper age limit; indexation of pensions to real income growth; guaranteed state pensions for those who have not earned pensions considered to be sufficient; calculating actual pension with regard to the remaining life expectancy of the person concerned; possibility for the capital accumulated in individual savings accounts to be claimed in the form of a pre-funded pension or used for investment in security funds; transferability of pre-funded pension rights between married or registered partners, etc. The new pension system includes three components: (1) PAYG public pension scheme providing income-related pensions, which have replaced a former national supplementary pension (ATP); (2) premium reserve funds providing a pre-funded pension financed from the savings on individual pension accounts; and (3) a guaranteed pension provided from the state budget as basic security for low income earners, which has replaced the former basic pension (FP). Out of the total pension contributions representing 18.5 per cent of the individual’s lifetime income, 16 per cent is used to finance pension payments under the PAYG scheme in the same year, while 2.5 per cent is saved and earns interest in an individual premium reserve account. While the old supplementary pension system was a typical defined benefit system, the reformed PAYG scheme and the premium reserve scheme are defined contribution schemes. The reformed old-age pensions system, which came into force on 1 January 1999, is being introduced gradually over an extended transitional period. Those born in 1937 and earlier will receive their ATP pension entirely according to old rules. Those born between 1938 and 1953 will have part of their pension calculated according to the rules of the old system and part according to the new rules, subject to a special guarantee rule that they will be entitled to at least the pension they have earned under the old rules up to the adoption of the pension reform by Parliament in 1994. Those born in 1954 or later will receive pensions entirely according to the new rules. The first payment under the reformed old-age pension system took place in January 2001.

The reform of the old age-pension was followed by changes in other social security branches. The new legislation on survivors’ pensions and support for children adopted in 2000 will enter into force from 1 January 2003, together with other laws related to the pension reform in Sweden. Under this legislation, the text of which has been supplied by the Government, the special survivors’ pension will be abolished, while the adjustment pension will be paid to a surviving spouse who at the time of the death of the other spouse lived together with a child under 18 years of age, instead of 12 years as before. In the spring of 2001, the Government put forward proposals designed to bring existing disability pensions into line with the new old-age pension system and the new rules are expected to enter into force from January 2003. A further government proposal to reform work injury insurance was to be presented in the autumn of 2001. Furthermore, a new Social Insurance Act, the text of which has been also supplied by the Government, entered into force on 1 January 2001 and divided the social security system (except unemployment insurance) into two parts: a residence-based insurance scheme providing guaranteed amounts and benefits and a work-related insurance scheme against loss of income. The dividing line corresponds largely to the difference between contributory and non-contributory benefits schemes. Both categories of benefits apply equally to all persons regardless of nationality who are habitually resident or work in Sweden. Work-related benefits are no longer related to residence in Sweden and the Act contains provisions on work, studies or stays abroad.

The Committee takes due note of this information. It notes that the reform measures have been accompanied by changes in the nature and methods of calculation of certain benefits. Taking into account that many of the new provisions concerning long-term benefits have not yet entered into force, the Committee would like the Government to continue to supply information on the reform process and to present a detailed report on the state of its legislation and practice in the invalidity, old-age and survivors’ benefit branches in 2004. Please also explain the new methods of the calculation of benefits and provide the necessary statistics in the manner requested by the report form on the Convention, together with an English translation of the new legislation, if available.

2. New mechanism for the revision of benefits. Article 29 of the Convention in relation to Parts III (Old-age benefit) and IV (Survivors’ benefit). According to the final report on "The pension reform in Sweden", June 1998, the old benefit formula for calculating pensions demanded an economic growth of approximately 2 per cent annually; with slower growth increased contributions to the system were necessary. While during the 1960s GDP increased by over 3.7 per cent per year, since 1975 average annual growth has been less than 2 per cent. Furthermore, the fluctuations in the business cycle have been increasingly large. The low rate of growth in the past two decades combined with growing instability and an increasing number of pensioners receiving higher pensions has exposed the weakness of the system and the need to reform it. Consequently, the mechanism of the adjustment of pensions has been changed. In the old system, to ensure that pensions did not depreciate as a result of inflation, both earned pension rights and pension payments were adjusted to price trends on the basis of changes in the consumer price index. This was done automatically by indexing the base amount used for the calculation of pensions. However, such indexation of pensions, which maintained their purchasing power in conditions of the decline or very small increase in real earnings in the country, has sharply increased the cost of the pension system for the working population. In the new pension system designed for conditions of low growth, contributions to the PAYG scheme as well as the payouts from that scheme were linked directly to economic growth. In place of price trends the value of pensions shall now follow the development of average income for the working population, so that the costs of the pension system will be automatically adjusted to the overall resources of the national economy. This is done by adjusting the base amount not to changes in the consumer price index but to changes in the new economic adjustment index, which reflects average income growth in the economy.

Thus, as regards the PAYG scheme, if real average income increases, the value of the income-related pension rights will also increase. If real earnings fall, the value of the rights will also decrease; in fact, it may be lower in terms of purchasing power than at the time of payment of the contribution. When the new pension is computed, the pensioner will be credited with an assumed future growth in real wages; the adjustment of the pension will be done subsequently on the basis of how actual growth compares with the assumed growth for this year. At present, indexation of pension payments is based on a notional future growth rate of 1.6 per cent, which is called the "norm". If real growth is equal to the norm, pensions will be adjusted upwards by a percentage equal to that of inflation. If real growth is higher than the norm, pensions will be adjusted upwards by the rise in prices plus the rate of real growth in excess of 1.6 per cent, which will give pensioners not only full compensation for inflation but also a share of the growth in real wages enjoyed by the economically active. However, if real growth is lower than the norm, full compensation will not be made for price increases and inflation, which means that pensions will fall in real terms.

According to the Government, the new adjustment mechanism relates only to old-age pensions and, from 2004, to survivors’ benefits, and that other benefits that were part of the former pension system, such as injury and invalidity benefits, have been separated from the new pension system. These benefits are still recalculated every year in accordance with changes in consumer prices. Furthermore, in the new pension scheme there is a guaranteed pension, which is designed to secure a minimum standard of living for pensioners and is also recalculated every year in accordance with changes in consumer prices. The existence of the guaranteed pension protects not only those with low lifetime incomes in respect of the level of their pensions, it also protects those with the lowest pensions from any decline in the real value of their pensions due to a growth in real wages of less than 1.6 per cent. On the other hand, these individuals will not benefit from any real growth in average wages of over 1.6 per cent. The guaranteed pension is calculated on the basis of the price-related base amount, which is adjusted every year in line with changes in consumer prices. It is reduced to zero for persons receiving a public earnings-related pension worth 3.07 price-related base amounts per year, who are therefore the only category of pensioners fully exposed to the risks of a slower growth in real average wages than 1.6 per cent per year. According to the Government, it is inevitable that pensioners in normal/higher income brackets are exposed to the risk of slow economic growth in view of the size of the earnings-related pension liability, which amounts to 250.6 per cent of GDP. A liability of this order cannot be guaranteed by public funds and the Government/taxpayers cannot guarantee the purchasing power of all earnings-related pensions irrespective of the rate of economic growth in Sweden. The Government considers that the above system represents a good balance between social and financial concerns, which automatically directs more resources to maintaining the purchasing power of low-income pensioners when growth is slack.

The Committee notes this information. It appears from the above explanations that, in difference with the old pension system, which was established in a rapidly and stably growing economy, the new pension system in Sweden is designed to function in conditions of low and unstable economic growth and to absorb the frequent fluctuations in the business cycle, subject to inflation being kept under control. This is achieved by replacing the defined benefit system with the defined contribution system, which permits to contain pension costs by turning the real value of pension assets from a "constant" into a "variable" depending upon the overall economic performance. Changing the adjustment principle from indexation to prices to indexation to real economic growth appears to be the logical consequence of this reform. The new mechanism for the revision of benefits however concerns only one of the three components of the reformed pension system, namely income-related pensions provided by the PAYG scheme. In the premium reserve scheme there is no need to index the pension capital because the interest is straightforward and consists of the yield from investments, while the new guarantee pension, in the same way as the basic pension before it, continues to be pegged to changes in consumer prices, thereby maintaining the purchasing power of pensioners of small means. To better appraise the design of the new pension system, the Committee would like the Government to provide statistics on the number of persons receiving the guaranteed pension in relation to the total number of old-age pensioners in Sweden.

As regards the new adjustment mechanism for income-related pensions, the Committee observes that, where the rate of economic growth in the country over the previous year does not reach the established norm (currently 1.6 per cent), pensions are adjusted downwards, decreasing their real purchasing power at the moment when it particularly needs to be safeguarded. It further notes that during the transitional period until 2030, this "norm" in economic adjustment indexing will be financially important, as the index will also apply to pensions calculated according to the old rules and will directly affect their value. In view of the fact that establishing a relatively high "norm" of economic growth would mean a relatively high risk of successive decreases in the real value of the pension, the Committee would like the Government to explain how this "norm" is determined in order to ensure the most realistic assumption of future economic growth.

Finally, as regards the consequences of the new adjustment mechanism, the Committee notes that, as stated in the final report on "The pension reform in Sweden", "when times are bad, pensioners bear their share of the burden. In good times, they benefit from the rise in living standards" (page 14). The Committee wishes to recall in this respect that the aim of the mechanism of the adjustment of benefits established by Article 29 of the Convention consists both in maintaining the purchasing power of benefits "when times are bad" by adjusting pensions to substantial changes in the cost of living, and raising the standard of living of pensioners "in good times" by adjusting pensions to substantial changes in the general level of earnings. With this in mind, the Committee would like the Government to explain in its next report the manner in which current periodical payments in respect of old age and death of a breadwinner were reviewed and to provide detailed statistics required by the report form under Article 29, for the same time period, based not only on the new economic adjustment index, but also on the traditional cost-of-living indices reflecting changes in consumer prices. As regards old-age benefit, please give data separately for the income-related pension and the guaranteed pension.

[The Government is requested to report in detail in 2004.]

Direct Request (CEACR) - adopted 1997, published 86th ILC session (1998)

The Committee notes the information provided by the Government in its report as well as its reply to the Committee's previous comments.

1. Article 41 (in light of Article 21, paragraph 3(b), and Article 1(h)) of the Convention. (a) With reference to its previous comments, the Committee recalls that, in accordance with section 5 of Chapter 8 of the Act of 30 June 1988 to amend the National Insurance Act, entitlement for an adjustment pension is maintained for as long as the surviving spouse lives with a dependent child under 12 years of age, whereas under Article 21, paragraph 3(b), and Article 1(h) of the Convention, the right of a widow to a survivors' pension must be maintained for as long as she is caring for a dependent child of the deceased under school-leaving age or under 15 years of age, whichever is the higher, or under such higher age as may be prescribed when the child is an apprentice or student or is an invalid. In its latest report the Government indicates in this respect that in Sweden the compensation is linked to the child and not to the surviving spouse, and since, in the great majority of cases, the survivor is custodian, in practice the compensation goes to the family. It adds that survivors' pension in the form of child pension is paid to children aged under 18 years or 20 years, if the child is studying.

While noting this information, the Committee observes that there has so far been no change in the situation in law. Regarding the level of the survivors' pension in the form of child pension for two children over 12 years of age, it further observes that, according to the statistics provided by the Government, this pension would not attain the level of the survivors' benefit prescribed by the Convention for a standard beneficiary (a widow with two children). In this situation, the Committee would once again express the hope that the Government's next report will indicate progress achieved in national law and practice to secure full application of Article 21, paragraph 3(b), of the Convention. In the meantime, the Committee ventures to draw the Government's attention to the two possibilities opened in this respect which might consist in taking measures either to prolong the widow's entitlement to an adjustment pension until the child she is caring for reaches at least the school-leaving age, or such higher age as mentioned above, or to raise the amount of the child pension for children over 12 years of age, so that the amount of such pension for the children would attain the level of the survivors' benefit prescribed by the Convention for a standard beneficiary.

In the event, however, that the Government would wish to continue to prevail itself of Article 41 of the Convention, the Committee hopes that it would not fail to supply in its next report full information required by the report form under this Article, and in particular under points 2 and 3.

(b) The Committee notes from the 30th Government's report on the application of the European Code of Social Security that, as from 1 January 1997, the period of entitlement to adjustment pension of a surviving spouse has been reduced from one year to six months. However, if the survivor's work capacity is reduced by at least a quarter, a special survivor's pension is payable after the right to adjustment pension has expired. In view of these changes, the Committee would like the Government to provide in its next report information on the scope of application of the special survivor's pension in practice, indicating in particular the special circumstances in which it is payable, duration of payment, the extent to which age, state of health and work expectations of the surviving spouse are taken into consideration, as well as the number of cases in which applications for this pension were refused and the reasons thereof.

2. Part V (Standards to be complied with by periodical payments). (a) The Committee notes the statistical data concerning the estimation of the reference wage used in the calculation of the level of the benefits, which, according to the information provided in the report under Article 10 of the Convention, amounted in 1995 to SEK200,800 per year. Please indicate the method used in selecting the typical employee to whom corresponds the said reference wage.

(b) In relation with Parts IX (Invalidity benefit) and X (Survivors' benefit). The Committee notes from the Government's report that, following the adaptation of the pension legislation to the EC rules, nationals and non-nationals residing in Sweden are entitled to basic pension (FP) under the same conditions according to two alternatives. The pension is calculated either in relation to the number of years with pension points under the supplementary pension scheme (ATP) or in relation to years of residence in Sweden. A minimum of three years of fulfilment is required to be eligible to a pension. In order to be entitled to full FP-pension, 30 years with pensionable income or 40 years of residence are required. The Committee would like the Government to be requested to indicate as far as the amount of the FP-pension is concerned, whether account is taken of the period elapsing between the contingency (invalidity or death of breadwinner) and the pensionable age. Please also describe the applicable rules.

3. Part VI (Common provisions), Article 32, paragraph 1(a). The Committee understands from the text of Chapter 16, sections 4 and 13 of the Insurance Act, that supplementary pensions (ATP) may continue to be paid abroad, in case of residence of the beneficiary out of the country, if the latter so wishes. It requests the Government to confirm that this is in fact the case.

4. Finally, the Committee thanks the Government for supplying the most recent consolidated version in Swedish of the National Insurance Act and reserves the possibility to examine it once the translation of the necessary chapters would be available.

Direct Request (CEACR) - adopted 1996, published 85th ILC session (1997)

The Committee notes that the Government's report has not been received. It hopes that a report will be supplied for examination by the Committee at its next session and that it will contain full information on the matters raised in its previous direct request, which reads as follows:

1. Part IV (Survivors' benefit). The Committee notes the new system of survivors' pensions, which came into force on 1 January 1990, following the adoption of the Act of 30 June 1988 to amend the National Insurance Act. The Committee also notes the Government's statement that the new system of survivors' pensions is intended principally to take into account the new situation with regard to women on the labour market, and the changes in family structures and social conditions generally. Furthermore, the Committee notes that the new system is covered by transitional provisions which may be applied over a long period. While fully aware of the reasons which have led the Government to reform its survivors' benefit system and the fact that the new legislation applies to surviving spouses, a term which includes men and women who were permanently living together at the time of death, the Committee wishes to draw its attention to the following point.

Article 41 of the Convention (in light of Article 21, paragraph 3(b), and Article 1(h). By virtue of section 4, Chapter 8, of the above Act of 30 June 1988, a surviving spouse who has not reached the age of 65 years upon the death of the spouse is entitled to an adjustment pension for a period of one year if the spouse has a dependent child under 12 years of age of if they have lived uninterruptedly with the deceased spouse for a period of at least five years. In accordance with section 5 of Chapter 8, entitlement to an adjustment pension is maintained for as long as the surviving spouse lives with a dependent child under 12 years of age. Furthermore, a surviving spouse who fulfils the conditions for entitlement to an adjustment pension under section 4, Chapter 8, is entitled to a special survivors' pension if its capacity to obtain an income from work is reduced by at least half following the death of the spouse and the reduction is due to conditions on the labour market, to the surviving spouse's state of health or to any other comparable circumstances which are presumed not to be of short-term duration (Chapter 8, section 6). Similar provisions apply to supplementary pensions under Chapter 14 of the Act of 30 June 1988.

The Committee recalls that, in accordance with Article 21, paragraphs 2 and 3, of the Convention, the right of a widow to a survivors' pension must be recognized in the following three cases: (1) when the widow has reached a prescribed age, which may not be higher than the age prescribed for old-age benefit; (2) when the widow is an invalid; and (3) when the widow is caring for a dependent child of the deceased. The new Swedish legislation appears to ensure the application of this provision of the Convention with regard to the first two categories of widows. Such does not appear to be the case for a widow who is caring for dependent children, since, in accordance with Article 1(h) of the Convention, the term "child" covers: "(i) a child under school-leaving age or under 15 years of age, whichever is the higher; and (ii) a child under a prescribed age other than specified in clause (i) of this subparagraph and who is an apprentice or student or has a chronic illness or infirmity disabling him from any gainful activity, under prescribed conditions: provided that this requirement shall be deemed to be met where national legislation defines the term so as to cover any child under an age appreciably higher than that specified in clause (i) of this subparagraph".

The Committee hopes that the Government will be able to re-examine the matter in the light of the above. In the event that the Government continues to prevail itself of Article 41 of the Convention, to which it referred in its first report, the Committee requests the Government to supply the information required by the report form under this Article of the Convention, and in particular under points 2 and 3.

2. Part VI (Common provisions), Article 32, paragraph 1(a). The Committee would be grateful if the Government would indicate whether, and under which provisions, supplementary pensions continue to be provided in the event of the residence of the beneficiary abroad.

3. Furthermore, the Committee would be grateful if the Government would supply the text in Swedish and, if possible, in English of the most recent consolidated version of the National Insurance Act.

Direct Request (CEACR) - adopted 1993, published 80th ILC session (1993)

1. Part IV (Survivors' benefit). The Committee notes the new system of survivors' pensions, which came into force on 1 January 1990, following the adoption of the Act of 30 June 1988 to amend the National Insurance Act. The Committee also notes the Government's statement that the new system of survivors' pensions is intended principally to take into account the new situation with regard to women on the labour market, and the changes in family structures and social conditions generally. Furthermore, the Committee notes that the new system is covered by transitional provisions which may be applied over a long period. While fully aware of the reasons which have led the Government to reform its survivors' benefit system and the fact that the new legislation applies to surviving spouses, a term which includes men and women who were permanently living together at the time of death, the Committee wishes to draw its attention to the following point.

Article 41 of the Convention (in the light of Article 21, paragraph 3(b), and Article 1(h)). By virtue of section 4, Chapter 8, of the above Act of 30 June 1988, a surviving spouse who has not reached the age of 65 years upon the death of the spouse is entitled to an adjustment pension for a period of one year if the spouse has a dependent child under 12 years of age or if they have lived uninterruptedly with the deceased spouse for a period of at least five years. In accordance with section 5 of Chapter 8, entitlement to an adjustment pension is maintained for as long as the surviving spouse lives with a dependent child under 12 years of age. Furthermore, a surviving spouse who fulfils the conditions for entitlement to an adjustment pension under section 4, Chapter 8, is entitled to a special survivors' pension if its capacity to obtain an income from work is reduced by at least half following the death of the spouse and the reduction is due to conditions on the labour market, to the surviving spouse's state of health or to any other comparable circumstances which are presumed not to be of short-term duration (Chapter 8, section 6). Similar provisions apply to supplementary pensions under Chapter 14 of the Act of 30 June 1988.

The Committee recalls that, in accordance with Article 21, paragraphs 2 and 3, of the Convention, the right of a widow to a survivors' pension must be recognized in the following three cases: (1) when the widow has reached a prescribed age, which may not be higher than the age prescribed for old-age benefit; (2) when the widow is an invalid; and (3) when the widow is caring for a dependent child of the deceased. The new Swedish legislation appears to ensure the application of this provision of the Convention with regard to the first two categories of widows. Such does not appear to be the case for a widow who is caring for dependent children, since, in accordance with Article 1(h) of the Convention, the term "child" covers: "(i) a child under school-leaving age or under 15 years of age, whichever is the higher; and (ii) a child under a prescribed age other than specified in clause (i) of this subparagraph and who is an apprentice or student or has a chronic illness or infirmity disabling him from any gainful activity, under prescribed conditions: provided that this requirement shall be deemed to be met where national legislation defines the term so as to cover any child under an age appreciably higher than that specified in clause (i) of this subparagraph".

The Committee hopes that the Government will be able to re-examine the matter in the light of the above. In the event that the Government continues to prevail itself of Article 41 of the Convention, to which it referred in its first report, the Committee requests the Government to supply the information required by the report form under this Article of the Convention, and in particular under points 2 and 3.

2. Part VI (Common provisions), Article 32, paragraph 1(a). The Committee would be grateful if the Government would indicate whether, and under which provisions, supplementary pensions continue to be provided in the event of the residence of the beneficiary abroad.

3. Furthermore, the Committee would be grateful if the Government would supply the text in Swedish and, if possible, in English of the most recent codified version of the National Insurance Act.