During the past few decades, social insurance has been characterised by generally high benefit rates. However, owing to the country's economic straits in recent years, many benefits have been reduced or their conditions otherwise tightened up. Nevertheless, the universal features of social insurance remain unchanged.
Social insurance in Sweden is currently in a phase of sweeping change. Parliament has resolved in principle to adopt a new system of old-age pensions. At the same time, fundamental reforms of both the system of early retirement and disability pensions and the systems for cash benefits in the event of illness and occupational injuries are being planned.
Administration of social insurance
All social-insurance benefits except those for unemployment are administered at local
level by the public social insurance offices (allmän försäkringskassa). For each county,
there is a social insurance office with a number of local branches. The offices have no
funds of their own, and play no part in funding social insurance. Collection of charges to
finance social insurance takes place through the tax system.
The social insurance offices are supervised by the National Social Insurance Board (Riksförsäkringsverket), which can also take decisions on certain regulations and issue recommendations on the application of social insurance. In the government, the Ministry of Social Affairs is responsible for legislative and budgetary issues relating to social insurance. Issues relating to unemployment benefits come within the Ministry of Labour's sphere of responsibility. (The administration of unemployment benefits is described in more detail below.)
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Definition Social insurance, social security, social protection and social assistance are concepts which vary somewhat from country to country and between judicial systems. Described here are primarily benefit systems that are regarded as social insurance according to the Swedish system. In addition, certain benefits are described that are not regarded as social insurance in Sweden but which, in many other countries and systems, come within the scope of this term. These benefit systems, such as health-care benefits and financial family benefits, together with those more specifically constituting social- insurance benefits, correspond largely to what is usually termed social security, for example within the framework of the work of the European Union and the International Labour Organisation (ILO). Social assistance, or means-tested financial assistance for people who lack other ways of supporting themselves, is not described here. |
Sickness benefits
The right to free or subsidised health care in Sweden is, broadly speaking, enshrined in
institutions outside the health-insurance system. Sweden is divided into 25 county
councils (landsting), each of which is responsible, in its respective area, for ensuring that
all the county's residents have access to good health care. The county councils, which are
governed by political assemblies elected in general elections, levy income tax on their
residents. Of this county-council tax, more than 80% is spent on financing health care.
The county councils own and operate hospitals and health-care centres, and employ the
great majority of health-care and medical staff. Most of the doctors with independent
practices are also remunerated by the county councils.
All county councils normally impose charges on patients who consult doctors or other medical staff, as partial financing of their activities. These patient's charges, which may vary from one county to another, are not reimbursed by health insurance; instead, the individual patient bears the cost, which is thus (in insurance terms) a form of excess. Patient's charges are currently in the range of SEK 100200 per visit to the doctor. On admission to hospital, the patient pays a charge that is currently at the maximum rate of SEK 80 a day. For pensioners receiving hospital care, the same maximum charge is levied in the form of a pension deduction.
For care of a person who is not resident in the county, the county council providing the care normally charges a cost price. In many cases, however, a different county council or a foreign social insurance system bears the costs.
For two health-care benefits, there is a national insurance system within the framework of the general health insurance. These are, firstly, drugs prescribed by doctors in the outpatient care services and, secondly, dental care.
The costs of certain drugs for people suffering from chronic and severe illnesses are 100% reimbursed by the general national health insurance. For other pharmaceuticals prescribed by doctors, patients themselves currently pay a maximum of SEK 125 for the first purchase of drugs on a prescription and SEK 25 for each further drug on the same prescription. Excess costs are paid directly from national social insurance to the pharmacy concerned. All residents in Sweden are entitled to these pharmaceutical discounts.
Dental-care insurance is also part of the general national health insurance, and covers all residents in Sweden aged 20 and over. Young people aged up to 19 are entitled to free dental care. For dental treatment within the framework of health insurance, patients themselves pay the first SEK 700 in a course of treatment. For costs exceeding this amount, national health insurance normally contributes 25% of costs. However, for costs exceeding SEK 3,000 in one course of treatment the share paid for by the insurance is 40%, and for costs in excess of SEK 7,000 it is 70%. The portion of costs borne by national insurance is paid directly from the insurance to the dentist providing care or, where the dentist is employed by a county council, to the county council concerned.
For people with recurrent needs of pharmaceuticals or visits to the doctor, there is a special charge limit, as protection against high costs, financed by national insurance. A person who has paid a total of SEK 1,800 for drugs and medical consultations in a 12- month period is entitled to free drugs and consultations during the remainder of that same 12-month period.
Cash benefits during illness
All residents in Sweden with an annual estimated earned incomefrom either
employment or self-employmentof at least SEK 6,000 are covered by the national
insurance regulations on cash benefits during illness and, when ill, are entitled to sickness
benefit. Income exceeding a ceiling of 7½ times the base amount (see box below) does
not, however, confer the right to sickness benefit.
Sickness benefit is not payable for the first, qualifying day of sick leave. However, there are certain exemptions for people subject to recurrent illness. For days two and three in a period of illness, sickness benefit is payable at 65% of the estimated income lost, and for ensuing days at 80%. After one year's illness, sickness benefit is reduced to 70%. There is no maximum number of days for which sickness benefit is payable.
The government has expressed its intention to replace the various rates in the sickness- benefit system by a uniform 75% rate for all days except the qualifying day, and the Riksdag has endorsed this intention in principle.
If a person's incapacity for work caused by illness is not total, sickness benefit may be paid at the rate of three-quarters, half or one-quarter of the sickness benefit payable in the event of total incapacity for work.
People who are employed at the time when they fall ill receive sick pay from their employer for the first 14 days of each period of sick leave, thereafter sickness benefit. Sick pay is payable, after the qualifying day, at 75% on days two and three and subsequently at 90% of the lost income from employment. With effect from 1996, these amounts too will be reduced to 75% of normal income up to a certain ceiling.
In the event of an employee's more prolonged illness, the employer is obliged to carry out a rehabilitation investigation in co-operation with the ill person and the social insurance office. If this investigation shows that rehabilitation measures should be undertaken, the social insurance office draws up a rehabilitation plan. As long as rehabilitation is taking place, rehabilitation benefit is payable instead of sickness benefit, at the current rate of 95% of lost income. A reduction in rehabilitation benefit, too, is planned: to 75% from 1996.
Both sickness benefit and rehabilitation benefit are taxable and count as income conferring entitlement to a future pension within the framework of the national supplementary-pension plan.
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Base amount The base amount is a concept derived from social insurance. However, in many cases it is used in other social sectors and in the private sphere as well. The concept was invented to permit the calculation of benefits and incomes to be smoothly adjusted to changes in the index of living costs, i.e. to safeguard the value of the pension system. In social-insurance legislation, many benefits are expressed as percentages of the base amount. This is determined by the government for each calendar year according to calculation bases established by law. The base amount was set for the first time in 1960, at SEK 4,200, and for 1995 the figure is SEK 35,700. The amount is a purely mathematical and statistical construct, representing no valuation of the lowest acceptable living standard or any such level. The ceiling for incomes conferring entitlement to social- insurance benefits is 7½ times the base amount, or SEK 267,750 for 1995. Since 1993, pension benefits and certain other benefits have been calculated with reference to the base amount reduced by 2%. This decreased base amount is SEK 34,986 for 1995. |
Parental insurance
Swedish parental insurance has evolved from classic maternity insurance into insurance
for loss of income due to care of newborn babies or infants. In all essentials, this gives the
same benefits to both parents. In principle, all parents residing in Sweden are covered by
parental insurance. In some situations, a certain period of employment in Sweden before
the birth of the child is also required. The benefit payable from parental insurance is
called parental benefit.
There are two kinds of parental benefit. Although it may in certain cases be paid for care of children up to the age of eight, one is called parental benefit in connection with childbirth. This form of parental benefit is payable for a maximum of 450 days for each child. Thirty of these 450 days are, when the mother and father have joint custody of the child, reserved for the mother and 30 for the father. The remaining days' benefit may be claimed by either of the parents. However, this is always conditional on the parent concerned personally looking after the child and therefore, in principle, refraining from gainful employment. Parental benefit may also be paid at one-quarter or half the full amount for those parents who, instead of refraining from paid work altogether, reduce their working hours. The total number of days is then increased to a corresponding extent. The great majority of parents draw this benefit more or less in conjunction with the birth or adoption. During the 30 days that are reserved for each parent, parental benefit is payable at 90% of the lost income estimated in the same manner as in cases of illness. For another additional 300 days, parental benefit is payable at 80%. For the last 90 days, this benefit is payable at a standard amount of SEK 60 a day, which is the same for everybody. For those who have no income, parental benefit for all 450 days is payable at the guarantee rate of SEK 60 a day. Around 90% of all parental-benefit days connected with childbirth are utilised by mothers.
The other form of parental benefit is known as temporary parental benefit. This is payable primarily when, owing to a child's illness, a parent has to refrain from gainful employment to take care of the child. One condition is for the child to be below the age of 12. This form of temporary parental benefit is normally payable at a maximum of 60 days per child annually. Roughly 60% of this type of parental benefit is utilised by mothers.
Another form of temporary parental benefit is that paid to the father, for a maximum of ten days, in conjunction with the birth of a child.
Temporary parental benefit is currently payable at 80% of lost income. The government and Riksdag (Swedish parliament) have resolved that all forms of parental benefit calculated on the basis of lost income will be payable at the rate of 75% from 1996, except for the 30 days reserved for each parent, for which the compensation rate is to be 85%.
Parental benefit is taxable and constitutes income bearing the right to a future pension in the national supplementary-pension plan.
Health and parental insurance are financed with a social-insurance contribution on incomes from employment that is paid by the employer. For 1995, the tax rate is 6.23%. In addition, a general employee's contribution of 2.95% to health insurance is charged in conjunction with taxation of employees and self-employed people.
The pension system
As mentioned in the introduction, a new system of old-age pensions is being devised and,
at the same time, major changes are planned in pensions for those who become
permanently incapacitated for work before the general retirement age. However, the
description that follows applies to the pension plans in force in 1995.
In Sweden, there are two co-ordinated pension plans. The older of these is for basic pensions (folkpension), which aims to guarantee basic security for everyone and originated before the first world war. In 1960, the plan for national supplementary pensions (ATP) was introduced; this aims to guarantee a pension in relation to previous earned income. Old-age pensions, disability pensions (known in Sweden as early retirement pensions) and survivor's pensions may be disbursed from both plans. Retirement age is the same in both and so, for example, are the requirements regarding impairment of working capacity for entitlement to early retirement pension.
Retirement age is variable between the ages of 60 and 70. The figure given below applies to people wholike the majoritystart drawing their pension at the age of 65. For earlier commencement old-age pensions are lower, and for later commencement higher, for the rest of the recipient's life.
In both plans, a person who becomes an invalid is remunerated with a disability pension that corresponds to what he or she would have received at the normal retirement age. The amount of this pension remains basically unchanged when, at the recipient's normal retirement age, it becomes an old-age pension.
In both plans, the survivor's pension is nowadays primarily a benefit for surviving children. However, widow's and widower's pensions that are both temporary and means- tested are payable from both plans. For older generations of women, a special widow's pension can be paid under previous regulations.
Over the years, the ATP pension has become the more important of the two plans. This pension is earned by all those aged between 16 and 65 who reside in Sweden and, in the course of a calendar year, have incomes amounting to more than one base amount. Incomes of between one and 7½ times the base amount are pensionable, and the maximum pension is attained after 30 years of pensionable income. For the minimum pension, at least three years are required. The size of the pension is calculated with reference to the 15 years in which the recipients earned most, and is payable at 2% of the mean income for these best-earning years multiplied by the number of years in which income was earned, subject to a maximum of 30. For a person who has worked for 30 years or more, this entails a pension of 60% of average pensionable income. For 1995, the maximum annual pension amounts to SEK 135,434.
The ATP pension is paid irrespective of the country where people are residing when they apply for their pension or where they may reside as pensioners. In other words, the pension is freely exportable.
The right to basic pension is acquired by everyone aged between 16 and 65 who is resident in Sweden. Each year of residence entitles the recipient to 1/40 of full basic pension. Fewer than three years' residence do not confer the right to basic pension, and years over and above 40 are not counted. Full basic pension for a single person is 96% of the base amount. For married people it will be, in principle, 78.5% from 1996.
For a person who has belonged to the ATP-pension plan, there is an alternative way of earning basic pension. Each year of pensionable income for a minimum of three and a maximum of 30 years confers the right to 1/30 of full basic pension according to this alternative. Here, basic pension may be regarded as a form of compensation for the fact that income up to one base amount in the course of one calendar year does not confer the right to supplementary pension.
For those who are not entitled to any supplementary pension, or only to a low old-age, survivor's or early retirement pension, a pension supplement is payable to boost the basic pension. Together, basic pension and pension supplement constitute a form of guaranteed minimum pension.
For 1995, this means that for single people with a full earning period behind them who start drawing their pension at the age of 65, the minimum aggregate amount of pension is SEK 54,003 a year.
For people with a low aggregate pension, a means-tested housing supplement for pensioners may also be paid. For those receiving only basic pension and pension supplement, or the corresponding ATP pension, this supplement covers some 85% of normal housing costs.
In principle, both basic pension and ATP pension are taxable income.
Within the framework of the basic-pension plan, certain benefits intended to cover the extra costs incurred by people with functional disabilities are also paid. Strictly speaking, these are not in the nature of a pension: for these, there are no residence or employment requirements. They may be paid to all persons with functional disabilities who actually reside in Sweden.
Under the legislation, the basic pension is payable to pensioners living outside Sweden only if they are Swedish citizens and if they have qualified for their pensions through work, i.e. have a pension calculated in 30ths linked to a national supplementary pension.
Financing pensions
The ATP plan is entirely financed through social-insurance contributions paid by
employers and self-employed people. The contribution is charged at 13% of earned
income, without any upper limit. Contributions are paid into a fund that currently contains
a reserve theoretically sufficient to cover some five years' pension payments.
Just over 50% of current outlays on basic pensions are covered by a special basic-pension contribution of 5.86%, which is entered directly on the income side of the government budget. This contribution is charged on the same basis as the ATP contribution. The expenditure takes place entirely via the government budget.
At present, the ATP plan represents some 60% and the basic-pension plan around 40% of total pension payments.
As preparation for the introduction of the new old-age pension system, a pension charge is being levied in 1995 in conjunction with the taxation of employees and self-employed people on income below 7½ times the base amount.
Occupational-injury insurance
In relation to the other components of social insurance, Swedish occupational-injury
insurance is supplementary only. This means that, in the event of illness or invalidity
resulting from injury at work, the general benefits are paid first, possibly followed by a
supplement from occupational-injury insurance. This insurance covers all employees
working in Sweden. For self-employed people to be covered, they must be resident in
Sweden.
During illness due to injury at work, when sickness benefit is payable from health insurance, no supplement is paid from occupational-injury insurance. For lasting injury and complete incapacity for work, in principle a life annuity of 100% of the victim's lost income, reduced by any basic and ATP pension received, is payable up to the national retirement age. The ceiling for income conferring entitlement to compensation is 7½ times the base amount.
Costs of the health care needed by people injured at work are also paid if their needs are not covered in a corresponding amount by general health insurance.
For financial reasons, the concept of an occupational injury is now considerably more stringent than it used to be. In the legislation, an occupational injury is defined as one resulting from an accident or other injurious effect at work. Certain mental disturbances caused by factors at the workplace are explicitly excluded from the concept of an occupational injury. Moreover, no occupational illnesses are defined.
Occupational-injury insurance is financed by a contribution of 1.38% charged on employers and self-employed people.
Unemployment benefits
In Sweden there are two systems from which cash unemployment benefits are paid. The
older is a voluntary unemployment insurance, disbursed by special unemployment-
insurance funds linked to the various trade unions. It is also open for non-union members.
The other is called cash labour-market assistance and covers people who are not insured
in an unemployment-insurance fund.
Benefits are provided from unemployment insurance in relation to previous income. The compensation rate is currently 80%. The decision in principle has been taken to reduce this rate to 75% from 1996. The ceiling for income conferring the right to compensation is currently just over SEK 15,000 a month, i.e., considerably lower than the rest of social insurance. Cash labour-market assistance is payable at a standard rate for everyone of SEK 245 a day at present; in 1996, this amount will be reduced to SEK 230.
Requirements for entitlement to compensation from the insurance are, first, membership of an unemployment-insurance fund for at least one year for employees and two years for self-employed people and, secondly, five months' work over the past 12 months. Relief work and labour-market training organised for the unemployed by the labour-market authorities are equated with work. As a rule, no compensation is payable for the first five days' unemployment. For people who voluntarily resign from their previous jobs, a waiting period of 20 days is normally required. The compensation period is 300 days for a member of an unemployment-insurance fund, or 450 for a person of 55 and over. For recipients of cash labour-market assistance the compensation period is 150 days, with 300 days for people aged 5559 and 450 for those aged 60 and over.
An unemployed person who declines the offer of a suitable job is excluded from the right to compensation, normally for 20 compensation days.
Unemployment insurance is administered by the special unemployment-insurance funds. These are subject to the supervision of the Labour Market Board.
To finance both forms of unemployment benefit, a social-insurance contribution is levied on employers and self-employed people, at the rate of 4.32%, with no upper limit. In the past few years, in which unemployment has been higher than previously, substantial deficits have arisen. People who, as members of unemployment-insurance funds, are eligible for unemployment insurance also pay a charge to their fund to cover its administrative costs.
Financial support for families with children
For children under 16 residing in Sweden, child allowance is payable at the current rate of
SEK 750 a month (SEK 640 from 1996). Child allowance is not linked to the base
amount; instead, the rate is determined by political decisions in the Riksdag. A special
benefit for large familieswith three or more childrenis linked to child allowance. This
special benefit is set to be successively phased out.
For children over 16 still attending compulsory school, extended child allowance is payable in the same amount as the general child allowance.
Another form of financial support for families with children is housing allowance. The size of this allowance depends on the number of children in a family and the size of the incomes and housing costs. However, a basic allowance is payable at SEK 600 a month for one-child families, SEK 900 for two-child families and SEK 1,200 for families with three or more children, regardless of their housing costs.
The rate of housing allowance is reduced by 20% of annual income exceeding SEK 115,000.
Child allowance and housing allowance are entirely financed by taxes.
International situation
As a member of the European Union and pursuant to agreements on social security with
nations outside the EU, Sweden is obliged to apply certain international rules on co-
ordination of social insurance for people who migrate from one country to another.
Therefore, not all the rules concerning the Swedish social-insurance systems that are
given here are in force internationally. This applies, in particular, to such requirements as
Swedish citizenship or residence in Sweden to earn or obtain payment of a benefit.
This fact sheet is part of SIs information service. It can be used as background information on condition that the source is acknowledged.
Printed in Sweden, November 1995
Classification FS 5 x Ok
ISRN SI-FS--95/5-X--SE
ISSN 1101-6124
Fact Sheets on Sweden