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EMPLOYMENT

Ex-politicians cash in on early pensions pay out

During the first half of 2011 more than 450 former local politicians shared a total of 42 million kronor ($6.3 million) in "temporary" early retirement pensions pay out, a study carried out by Sveriges Radio (SR) shows.

Ex-politicians cash in on early pensions pay out

“But my dear fellow, it’s not like I have days when I sit around and twiddle my thumbs. I am involved in many different things,” former local politician Bertil Daniels from the county of Dalarna in central Sweden told local radio.

Daniels, a member of the Centre Party, has received about 250,000 kronor per annum over the past 12 years.

According to the pensions agreement agreed by the Swedish Association of Local Authorities and Regions, politicians that leave their post by choice or are forced out can receive a temporary pension from the age of 50 to retirement age (65 in Sweden).

In many cases the retired politicians are guaranteed several hundred thousand kronor up until they are 65.

Daniels left his post by choice at the age of 51. He doesn’t think that the remuneration, which is given without any requirements on the recipient to look for a new job, directly contradicts his party’s employment policy.

“This was an agreement which was made by the Association for Local Authorities (Kommunförbundet) and the Swedish Association of Local Authorities and Regions (Sveriges Kommuner och Landsting) and I had no reason to go against that in any way,” Daniels said.

Annie Lööf, soon to be voted in as the new party leader of the Centre Party, wrote an opinion piece in daily Expressen in June, where she argued that the same employment conditions should apply for all of society.

“It is not feasible that those of us who are actively working to change the Swedish social security systems from benefit traps to insurance against temporary changes ourselves are guaranteed an income which encourages passivity and benefit dependency,” she wrote.

According to Sveriges Radio, Daniels has been able to collect just over 3 million kronor since he left his post. Currently he is chairman of the local ice hockey club Leksand IF.

Currently 63 years of age, he has two more years of collecting temporary pension from the state.

“I looked for work in the very beginning, but was unsuccessful,” Daniels told SR.

Although Lööf wrote that there is a good reason for why there is an income guarantee for politicians as they don’t enjoy the benefits of a notice period or job security, she also thinks that this should be temporary and gradually decline in order to encourage work.

“Our basic belief is that everyone can and everyone is needed,” Lööf wrote in June.

According to the SR investigation, over 450 Swedish politicians have claimed the temporary pension after leaving their posts.

Former councillor from Arboga, in central Sweden, Social Democrat Kjell Söderström moved to the Phillippines where he is currently staying at a scuba diving centre, after leaving his post on the local council.

For the last seven years he has received 300,000 kronor per annum from Sweden.

“I definitely benefit from it. If I lived in Sweden I would probably think it was a reasonable remuneration, but here prices are a bit different,” he told SR.

If Söderström continues to claim his pension until he reaches retirement age, he will have collected about 4 million kronor in total. According to Söderström he doesn’t have to work.

“I might help out a bit in the diving shop,” he told SR.

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PENSIONS

Sweden to increase retirement age from next year

A proposal for changes to Sweden’s pensions system could see incremental increases to retirement age beginning next year.

Sweden to increase retirement age from next year
Photo: Hasse Holmberg/TT

The proposal for reform to state pensions has been agreed on by parties on both sides of the political aisle, reflecting the political agreement which provided for the new Swedish government.

Later retirement age has been justified by the claim that people in Sweden “live longer and healthier lives”, but the last twelve years of life remain characterised by illness and failing health, news agency TT writes.

According to the proposal, the minimum age at which a state pension may be drawn will increase next year from 61 to 62 years. The right to retain employment, the so-called LAS age, will also be increased, from 67 to 68 years.

“We see a problem with the fact that people who want to continue working are not able to. We will now give people the opportunity to do that,” said Mats Persson of the Liberal party, who was part of the parliamentary group behind the proposal.

In 2023, retirement ages will increase again, with the minimum state pension age changing to 63 and the LAS age to 69. The so-called guaranteed pension, which is paid to those who have had little or no pension-qualifying income during their working lives, will also see an increased age limit from 65 to 66 years.

2026 will see further extensions, to 64 years and 67 years for the regular and guaranteed pensions respectively.

In a press statement, the government wrote that longer and healthier lives made the reforms to retirement age possible. Average life expectancy in Sweden has been found to increase by 3.5 hours every day.

But longer life expectancy does not necessarily correspond to better health in senior years, according to research.

International studies led by the Institute for Health Metrics and Evaluation (IHME) and the University of Washington recently found that Swedes have relatively high life expectancy – just under 82 years for both women and men – but that years with good health are considerably fewer, at just under 70 years.

Sweden fell outside of the top ten for countries with the most years of good health, the study found. Japan was the best-performing country, followed by Singapore, Andorra, Iceland and Cyprus.

The pensions proposal could therefore mean that retirement years will become increasingly unlikely to contain many years in which senior citizens can enjoy good health.

Persson told TT he disagreed with that conclusion.

“This agreement is based on the fact that we live longer as well as healthier lives. There is research to support that,” he said.

READ ALSO: How to manage your pension in Sweden – even if you're not planning to stay

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