Abstract
[full article and abstract in English] The aim of this study is to compare Lithuanian and Swedish pension systems from the point of view of their design and performance in order to elaborate reasonable recommendations to Lithuanian pension policy based on the best Swedish experience. Swedish income, premium and guaranteed old-age pensions system are compared with the analogous Lithuanian system of the “first,” “second” pillars and the “social” pensions. The main features of the systems are discussed, and the performance of the systems, mainly from the point of view of adequacy, is compared. The differences in system design and performance are identified, and the possible reasons of these differences are examined. Special attention is paid to differences in financing and the approach to the definition of benefits. The Lithuanian pension points approach is compared to the Swedish Notional Defined Contribution (NDC) approach. Each system is analyzed, and the relevance of transforming the Lithuanian first pillar pensions into a NDC system is examined.
Highlights
The problem of protecting the senior populace always was and still remains one of the main challenges of the modern welfare state
A common feature of both the Lithuanian and Swedish pension systems is that both consist of the pay-as-you-go and funded components and supplemented with “guaranteed” or “social” provisions for those who are not entitled for pension benefits at all or for whom these benefits are too low
Both systems have formal rules on how to slow down or stop the indexation, but these rules are quite different: the Lithuanian system directly relies on macroeconomic indicators, while the Swedish one relies on these indicators indirectly, via ABM
Summary
The problem of protecting the senior populace always was and still remains one of the main challenges of the modern welfare state. Population ageing is an important factor making this problem even more significant. The share of experience among countries who implemented pension reforms in order to maintain pensions’ adequacy and sustainability in the changing world may contribute to common progress in this field. It appears valuable to compare the Lithuanian pension system, which is still in the process of changing, to the Swedish system, which is characterized by long experience. A Comparison of Lithuanian and Swedish Old Age Pension Systems and modern reform and which is frequently mentioned as successful and benchmarking for other countries. The aim of this paper is to compare the analogous statutory parts of Swedish and Lithuanian pension systems, with special attention to similarities and differences in benefit composition, and to evaluate the chances of adopting this system in Lithuania
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