The Swedish 'respect gap', the difference in pension between those who have worked their entire professional life and those who have worked little or not at all, has decreased “significantly” in recent years, a report from Skandia has found.

Skandia said this was an effect that challenged the pension system's most important basic principle, which is that the pension is based on income from the entire working life.

Skandia pension economist, Mattias Munter, said that Swedish politicians face a “big challenge” if the basic principle that the pension should be based on income from the entire working life is to be protected.

“Today, the difference for some groups is completely erased if you look at the general pension alone. In principle, it is the occupational pensions that ensure that the distance of respect is maintained today,” Munter added.

In addition to this, the report showed that the respect gap decreased by up to SEK 1,350 a month for future pensioners who have worked all their lives, compared to those who have worked little or not at all.

Munter argued that the drive for work was “crucial”, not only for building the saver's own future pension but also for pensioners whose income-based pensions are increased in line with the general income trend.

He emphasised that if the drive to work were lost, the entire pension system would be challenged.

The report also showed how changes in the Swedish pension system have led to working an entire professional life in Sweden becoming less advantageous.

Since 2021, a series of changes to the Swedish pension system have come into effect, including the political decision to strengthen the guaranteed pension, which impacted the respect gap the most. The guaranteed pension is part of the basic protection in the public pension system.

Skandia said the changes weakened the link between work, income, and pension.

Munter added: “The effect of the Riksdag decisions linked to the respect distance was reinforced when we had a period of high inflation which increased the basic protection significantly more than the income-related pensions.

“For 2025, however, we see that the income pensions will again grow more than the basic protection, which is a welcome effect of the decrease in inflation.”

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