Sweden's pensions and parent policies keep old age worries at bay

Tue Dec 2, 2014 3:22am EST
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By Daniel Dickson

STOCKHOLM (Reuters) - Like most of Europe, Sweden is struggling with an aging population. But thanks to people like 65-year-old Malin Engstedt the country is in a better position than most to tackle its demographic challenges.

"I thought half a year ago that maybe I could quit by the end of the year. But the closer to that I got, the less I felt like stopping working," said Engstedt.

Having worked all her life, Engstedt could afford to stay at home if she wanted to. But her pension will be higher if she retires later, and she is still enjoying work. So right now she plans to take on a new job in communications.

"I don't have grandchildren and I don't play golf," she explains of her decision not to retire.

But in fact Sweden's canny social policies are the reason so many of its baby boomers are choosing to keep going to the office. The country's pensions reform and generous parental leave have resulted in Europe's highest employment rate - with a strong showing among women and the elderly - meaning more working people pay taxes to fund the welfare state.

Sweden's employment rate last year was 74.4 percent versus the EU average of 64.1, according to Eurostat, and its 73.6 percent employment rate for people between 55 and 64 dwarfs the EU average of 50.1 percent.

The country is also helped by a population that is rising as numbers in other European nations dwindle: By 2050 Swedes will number 11.4 million from today's 9.7 million, according to statistics Sweden, and the median age will rise to 43 years, says Eurostat.

By contrast, Germany's 82 million residents will fall to 74.7 million by 2050 and the median age will rise to around 50.   Continued...

The Stockholm Cathedral is seen in Gamla Stan or the Old Town district of Stockholm in this June 9, 2010 file photo.  REUTERS/Bob Strong/Files