The Pension Research Council
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Working Paper

The Future of Retirement in Sweden

Annika Sundén
WP2004-16

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Abstract

In 1998, Sweden transformed its Social Security system into a Notional Defined Contribution (NDC) plan financed on a pay-as-you-go basis paired with a second tier of funded individual accounts. The goal was to move toward a fiscally sustainable system tied to economic growth, with a clear link between contributions and benefits. This chapter discusses the evolution of the Swedish retirement system and the challenges confronted during the implementation of the reform. The analysis also offers an outlook for the future and discusses lessons for the US retirement system.