Swedish lesson on privatizing pensions

[NNN0LHI]

http://www.yubanet.com/artman/publish/world.shtml#18017

STOCKHOLM: Every spring Marie-Louise Graveleij, a 62-year-old receptionist in a funeral home, receives a large orange envelope in the mail. Now it has become her lifeline, offering what might be her only alternative to a full-time job.

In approximately six weeks' time, she said, she will end her current work contract and will decide whether to retire. The orange envelope contains a statement of her benefits under a five-year-old restructuring of this country's generous state pension plan that, like the changes that President George W. Bush wants to introduce in the U.S. Social Security system, includes a personal investment account. The question is: Will she get by on what the envelope offers?

As in other countries where private accounts have been introduced in various forms, the answer seems to be ambiguous.

"I felt everything was going to be simple. This is Sweden!," Graveleij said, musing over her understanding of her pension entitlements before and after the changes. "I didn't worry about it before. I felt safe. I felt everything would be OK. Then, the safety net was gone."

Even after poring over the statement of benefits, she said, she was still not sure whether she would be able to afford the $450 monthly rent on her 400-square-foot apartment. "Everything has become very complicated."

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[rodeodance]

1. the WH says that we do not want to be like the Europeans (socialized)-yet

that comment takes on new meaning in the context of articles such as above.

[Stockholm]

2. What is important to remember about the Swedish version

Is that it was a bipartisan agreement between the five biggest political parties under the leadership of the Socialdemocrats that made the scheme possible.

The funded part is only a small part of the total pension, 2,5 percent of your gross income which is automatically put into a 401k-like platform with about 700 investment funds to choose from.

The total first pillar pension is 18,5 of ones gross earnings. 16 percent is managed by the government.

AND for those who don´t make enough money to reach a certain pension level (single mothers, women who have stayed home raising their children, i.e. have not worked enough, or low income earners or basically anyone else) will receive a top up or "guarantee pension" by the government to guarantee that no one falls between the cracks.

The system was launched in 2000 (worst possible scenario) and a lot of people are angry as their savings are in the red.

Now a government committee is looking over the scheme to suggest improvements.

To this one has to remember and add that almost everyone has a occupational second pillar pension through their collective union agreements. And universal health care, etc etc.

It would be very difficult and dangerous to compare the Swedish experience and the US proposal.

If anyone is interested to learn more about the Swedish Social Insurance (Pensions, medi- and dental care, family and employment parts) if republicans ever tries to compare the two:

http://www.forsakringskassan.se/sprak/eng/

[gorbal]

3. Good point!

We don't have anything to fall back on like the Swedes do. They have pretty much filled up the cracks in their system while we are opening ours up.