7
occupational pensions. There exist four large collectively-agreed occupational pension
systems: (i) central government employees, (ii) local government employees, (iii)
privately employed white-collar workers, and (iv) privately employed blue-collar
workers. For central government employees in the period studied here, these pensions
awarded extra pension income amounting to about 10 percent of additional income
replacement for income below the cap, and about 65 percent for income above the cap.
11
For a large share of civil servants, the occupational pensions are important for the
income in their old age.
12
Generally the occupational pensions offer relatively favorable possibilities for early
retirement. During the period under study, several professions, particularly in the public
sector, had a normal retirement age below the national retirement age of 65 as part of
the collective agreement. Those employees, including military employees, retired with
incomes from occupational pensions only, thus postponing the start of public pension
withdrawal to the 65
th
birthday. For central government employees with full earnings
history (30 years), the level of compensation in early retirement was about 65 percent of
earnings (for those with less than 30 years of service the benefit was reduced
proportionally). Since public pension withdrawal was postponed until age 65, retirement
with occupational pension implied no cost in terms of reduced public pension benefits
after age 65.
4
The reform: the defense bill in 1992
The defense bill was taken by the Swedish Parliament in February 1992 and covered the
years 1992 to 1997 (Prop. 1991/92:102, p 102). The defense bill declared that the
Swedish military defense needed structural changes that required the personnel to be
better trained. It was, furthermore, stated that the number of personnel in the Armed
Forces were to be reduced by more than 1,500 regular military officers, more than 4,500
civilian employees, and approximately 1,200 reserve officers (Prop. 1991/92:102, p.
base amount (IBA). In 2013 the IBA was 56,600 (6,576 Euro) and the cap was 424,500 SEK in 2013 prices (48,000
Euro).
11
Blue-collar workers only had extra pension income below the cap from their collective agreement.
12
For the importance of this with regard to our studied population, see the data description. Försäkringskassan (2012)
shows that occupational pensions have become more important over time. For instance, about 15 percent, 30 percent,
and 50 percent of all 50-59 year olds (independently of profession) had incomes above the cap of 7.5 times the PBA
in 1991, 2001, and 2010, respectively. Försäkringskassan (2012) also shows that for military personnel between the
ages 28-64, almost 80 percent had incomes above the cap in 2010.
