Mathias Lindholm and Filip Lindskog: Analyzing mechanisms for brake and gas in the income pension system

Abstract

We will give a non-technical introduction to the income pension system and present an analysis of this system that we have done in order to facilitate informed discussions about possible modifications to the current design of the pension system.

We have analyzed the future effects on the so-called ”balanstalet” (a number intended to summarize the balance sheet of the income pension system) and pension payments of the introduction of so-called ”gas” aimed at increasing pension payments when there is room for this in term of the level of ”balanstalet”. Our analysis is based on time series from 2001 to 2023 for key components of the pension system. These historical time series have been adjusted by the Swedish Pensions Agency in order to remove the effects of historical periods with an activated so-called ”brake”. Our basic assumption is that relative changes for these time series, merged into randomly ordered calendar time intervals, represent possible future relative changes. Our results show likely effects of introducing a gas mechanism, where different levels are studied, compared to the current system with only a brake mechanism.