ABSTRACT
This chapter focuses on the financial risks and gendered poverty outcomes in retirement. The reformed Swedish public pension system first became operational in 1999 for the income pension and then in 2000 the premium pension choice, after a parliamentary decision 1994. The pension system is modelled according to the new Swedish system with some simplifications. The decision to index the pension system with average wage growth instead of the growth of the wage sum made it necessary to have an adjustment mechanism to preserve both financial balance and inter-generational fairness within the PAYG component of the public pension. The automatic balance mechanism was introduced to cut benefits when liabilities were deemed to exceed assets in the system. The brake allows keeping a fixed contribution rate while also preserving the long term financial sustainability of the PAYG system.
