The Swedish pension system consists of three pillars: state pension, company pension and private savings. What is more special in this case is that part of the state pension contributions are invested in the stock market - we are talking about - 2.5 percent of it.
Everyone has to make their own choice: either determine which fund to invest in themselves, or simply choose the Swedish state fund. Philipp Jarhamn from the Swedish Pension Agency explains: "Younger generations hardly choose a fund themselves anymore. And that is completely normal. "Anyone who understands the stock market can invest in one of the recommended funds," Philipp Jahrhamn from the Swedish Pension Agency told German public broadcaster ARD.
The closer you get to retirement, the more cautious you invest
The Swedish sovereign wealth fund invests, among other things, in stocks from all over the world. And in recent years it has achieved double-digit average returns. Of course, there is still a risk that stock prices will fall. The idea of the Swedish model, however, is that those who still have many years until retirement can wait for these fluctuations to pass. The closer you get to retirement, the more cautious you invest.
Many young Swedes have confidence in their pension system. "I think that for most Swedes this is a good thing, especially if you don't understand much about finance," said one young man quoted by ARD. "I believe the state knows what it is doing", shares another. And a third has some concerns: "I also hear that the money may not be enough to support oneself in the future, which definitely worries me".
Pension depends primarily on salary
The Swedish model does not solve all the problems related to pensions. The retirement age is automatically adjusted to life expectancy and was recently raised to 67. In addition: the majority of pension insurance continues to depend on salary.
Regardless of this, it is a good idea to invest part of the pension contributions in the capital market, 72-year-old Swede Torbjörn Ershon is convinced. He tells ARD that he does not understand the critical attitude of many Germans on this issue. "I think some people have the wrong idea about the stock market. "If you combine funds and risks well, you often end up with more money than if you just leave it in the bank," he assures.
Sweden's experience shows: the stock market can support the state pension, but it does not solve the problem of aging societies, the ARD publication also states.