Swedish pension fund Alecta has published new research showing that at an individual level – rather than measured by household – there are disproportionately more young people on the lowest incomes than there are pensioners among the Nordic country’s poorest.
In the study, the SEK1.3trn (€116bn) pension fund – Sweden’s largest – said it focused on the 15% of Swedes who, regardless of age, had the lowest income after tax.
Staffan Ström, pension economist at Alecta, said: “Many people have the idea that pensioners would be overrepresented among those with the lowest income, but that is not actually the case.”
It was also a common belief that the worst-off pensioners were widows and single people, he said, but added that this was not true either.
“Instead, it is typically married pensioners who stand out as having the lowest incomes after tax,” said Ström.
Alecta said the main explanation for the findings was that the pensions firm had analysed people’s individual incomes instead of measuring income at the household level.
In Sweden, the relative poverty measure based on an entire household’s income was usually used, he said.
“That way of measuring it often hides a person with a low income behind someone else in the household with a significantly higher one,” said Ström.
“And since political efforts to reduce poverty are usually individual, the household measure becomes quite blunt. Many people can have seemingly good finances because they live with others,” he added.
Alecta said Sweden’s public support systems for the elderly worked in an equalising manner, and were significantly stronger than the basic protections that existed earlier in life.
This meant that in many cases, income increased at retirement for those who were low-income earners.
“On top of that, the general pension does not give pension rights on high incomes, which means that the spread between low and high-income earners is significantly narrower in the older population,” the pension fund said.
Among the findings in the study were that low-income earners could be found in all age groups, and the largest proportion was in the 20–29 age group.
Alecta said there were some very low incomes among low-income earners between 30 and 50 years old, whereas the median income for low-income earners in the pensioner group was significantly higher.
Women were clearly overrepresented among those with low incomes, the firm said, with every fifth woman belonging to the group with the lowest income, but only every tenth man coming into that category.
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