Pension gaps continue to grow: report

Income gap among Swedish pensioners has grown over the last 10 years, according to a report from Statistics Sweden (Statistiska Centralbyrån - SCB) covering 1999-2008.

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The gap has increased both among pensioners and in relationship to the rest of the population, reported Svenska Dagbladet (SvD) newspaper. Over the 10 years, pensioners' after-tax income grew by 24.5 percent while that of the overall population grew by 34 percent.

Over the ten year period, the median annual income increase for a retiree was 31,000 kronor ($4,100) while the median annual income increase for a 45-year-old salaried employee was 54,000 kronor ($7,500).

The statistics do not include 2009 tax reductions of 5.5 billion kronor for pensioners. Neither do they control for the negative effects of the financial crisis on pensions.

Last weekend, Sweden's centre-right government indicated it will include tax cuts for pensioners amounting to five billion kronor ($688 million) in its impending spring budget.

The tax cuts are planned to take effect from January 1st 2011 and will entail a reduction of 1,200-1,400 kronor per year for people on a guarantee pension and born before 1937. A pensioner with an income of 150,000 kronor can expect to retain 2,400 to 2,800 kronor more than is currently the case.

Combined with the government's two previous rounds of tax cuts, guarantee pensioners will see their tax bills drop by 4,500 to 5,400 kronor per year.

According to SvD, Social Democrat Thomas Östros said that "a real first step should be made to reduce the gap and the rest of it should be addressed as soon as possible during the next mandate period."

Swedish Minister of Finance Anders Borg said that there may be grounds to take additional measures to reduce tax differentials.