6
This study and similar studies of the effects of retirement on subsequent health relate
closely to the field of literature (by now, quite large) on the health effects of job loss
(e.g., Eliason & Storrie, 2009a, 2009b, 2010; Browning & Heinesen, 2012; Black et al.,
2013). All things considered, the evidence suggests that there are considerable adverse
health effects from losing a job and becoming unemployed. However, for several
reasons, the effects of unemployment most likely differ from the effects of (voluntary)
retirement. First, unlike unemployment, retirement is likely to have a smaller impact on
the disposable income, especially in the long run. That is, income loss due to early
retirement presumably has a smaller effect on income later in life than (long-term)
unemployment. The early retirement program investigated in this study left the
retirement income at normal retirement age unchanged, given that the individual had a
full record of 30 years of service. Second, one can assume that it is much more stressful
to become unemployed than to enter retirement, since being unemployed may impose a
social stigma different from that of retirement. Unplanned “retirement” (via
unemployment) may furthermore be stressful because of uncertainty about the future,
which in turn may reduce the possibility to invest in one‟s own health.
3
The Swedish pension system
7
The public pension system for the cohorts under study was mainly
8
a defined benefit
scheme consisting of a flat-rate basic pension and an income-related supplementary
pension based on the best 15 out of 30 years of earnings.
9
The normal pension age was
65. In case of early (or late) retirement via the national pension system, the replacement
rates were reduced (increased) through actuarial adjustments.
Most workers have supplementary pensions via occupational pension schemes,
formed through collective agreements by the unions and employers‟ federations. The
public system has a cap, which was 333,750 SEK in 2013 prices (about 38,000 Euro) at
the time of the reform.
10
For most employees, incomes above the cap are covered by
7
A more detailed description of the Swedish institutions is provided in the Appendix.
8
A new pension scheme was phased in in 1998. Individuals born 1938-1953 are in both the new and the old schemes.
Those born 1938 had 16/20 (those born 1939 had 15/20) of their national pension from the old system. Thus the
cohorts studied here – born 1931 to 1939 – receive public pensions mainly from the old system.
9
For those with fewer than 30 years of service, the benefit was reduced proportionally.
10
The cap was linked to prices and was 7.5 times the price base amount (PBA). The price base amount is determined
by the government each year and follows the price level. In 2013 the PBA was 44,500 SEK (5,170 Euro). The price
base amount is used for indexation of the compensation levels in nominal kronor, for the majority of benefits in the
Swedish social insurance system. Since 2003 the cap has instead been linked to incomes and is 7.5 times the income
