Edited by Giuliano Bonoli and Toshimitsu Shinkawa
Chapter 5: Pension Reform in Sweden: Radical Reform in a Mature Pension System
5. Pension reform in Sweden: Radical reform in a mature pension system Karen M. Anderson1 INTRODUCTION The public pension system has long been considered one of the crown jewels of Swedish social democracy. After a protracted political conflict, the Swedish Social Democrats (SAP) adopted the so-called ‘ATP’ reform in 1957 that added a public earnings-related tier to the existing flat-rate basic pension. The conflict over pensions pitted employers against unions, Social Democrats against the bourgeois parties, and prompted the break-up of the Social Democratic-Agrarian Party coalition government. Voters went to the polls twice in two years over the pension issue; once for new elections in 1958 and once for an advisory referendum (1957) on the new pension system. The Social Democrats finally prevailed in parliament, adopting the ATP legislation by a razor-thin majority made possible by the abstention of a Liberal MP. The victory of the Social Democrats in the struggle over public pensions ushered in a long period of expansion and consolidation. By the early 1990s, the pension system was the largest single welfare state program in terms of spending; what is more, the ATP system also generated relatively large publicly controlled pension funds (AP Funds). In 1992, these funds stood at SEK 512 billion, or 35 percent of GDP (Proposition 1993/94: 250). By the early 1990s, welfare state reform in general and pension reform in particular reached the top of the political agenda again, but instead of open conflict, behind the scenes cooperation across the political spectrum marked...
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