Pension reform in Sweden promises:
1/ Budgetary savings. Partial privatization, combined with reform of the government-run, pay-as-you-go portion of the retirement system is expected to result in a fiscally sustainable system. Future expenditures will be lower, protecting Swedes from higher taxes, higher spending and large deficits.
2/ Higher retirement income. The ability to invest privately over a working lifetime will allow Swedish workers to benefit from compounding returns. The average blue-collar worker, for instance, should enjoy 40 % more old-age income. Swedish retirees will have a safer and more comfortable retirement.
3/ Economic growth. By reducing the payroll tax rate and creating a direct link between lifetime income and pension benefits, Swedish pension reform will increase incentives to work. Moreover, the shift to a funded system will boost national savings, thus providing capital for future growth.