Swedish pensions sink with the stock exchange

Sweden was once held up as a model of a modern welfare state, that all should copy. That myth was exposed for what it was long ago. And what is happening to the Swedish pension system is symptomatic.

Swedish workers have seen their real pensions decrease by 4% since 2000 as a result of the falling stock exchange. Gambling with pension funds on the stock exchange has not turned out to be the great solution to the "demographic time-bomb" that it was made out to be.

In 2000 the so-called PPM system was introduced in Sweden. After suppressing dissent within the ranks of its membership, the leadership of the Social Democratic Party agreed in 1997 to “invest” an eighth of the Swedish state pension funds in the stock exchange. The proposal scrapped the old under-funded ATP system, which had been established in the 1950s after decades of struggle. Through this they basically separated pensions from earnings and linked them to the stock exchange.

The results are now clear. Instead of providing an increase in pensions as was promised in 1997, the new system has cut pensions by 4%, after taking into account inflation. Out of the 50,000 SEK that the average Swedish worker has paid into the stock exchange over the last 8 years, only 44,000 SEK remains. This represents a massive cut in the pensions.

So whilst in the past, Swedish capitalism was able to provide an earnings related pension for the workers, now the state is cutting pensions. The leaders of the Social Democrats and their friends in the parties of the bourgeoisie, say that “we can no longer afford” to pay pensions to the workers. Just like in other countries, they can of course afford to pay big bonuses to the managers and huge dividends to the shareholders. A decent pension for the workers, however, is more than they can manage.

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