Pension liabilities of Swedish municipalities and regions are continuing to increase, according to a new report from pension provider Skandia, with the collective obligations having grown by SEK42bn (€3.66bn) between the 2022 and 2023 financial years.
In the report, which Skandia produces every year, the firm said that at the end of the financial year 2023, the total pension debt of municipalities and regions around the country amounted to over SEK543bn.
This translated into a pension debt per resident of more than SEK50,000, the firm said, adding that the next generation would have to pay for that.
Greger Gustafson, business manager public affairs at Skandia, said: “For last year, we can clearly see the inflationary shock in the municipalities’ and regions’ pension debts.
“Municipalities and regions are having to pay dearly for their pension commitments – in total, the financial cost of the pension debt was close to 10%,” he said, adding that the cost could not be paid by the local authorities so, instead, it simply increased the debt and was deferred into the future.
Skandia said it had been mapping the pension debt for over a decade, partly to form a basis for decision-makers.
Without clear financing plans, it said, municipalities and regions risked ending up in financial difficulties.
Many municipalities and regions also lacked matching assets or clear and adequate plans to finance the pension liabilities, Skandia said.
“In our analyses, we can see that almost every second municipality has had a negative population trend in the last 40 years,” Gustafson said. He added that this meant many local authorities had an increasing proportion of elderly people and fewer inhabitants of working age.
“That makes the challenge even greater, as fewer people can participate in paying the pension debts,” he said.
IPE has asked the Swedish Association of Local Authorities and Regions for comment.
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