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The world and the Swedish economy are strongly affected by the current crown crisis. The situation is changing rapidly and prompted the State Economic Institute, KI, to update its forecast last week. Less than a month had passed since the previous forecast and the forecasts are generally released every quarter.
The grim picture in KI’s forecast with falling growth, declining employment, and rising unemployment also affects other prospects.
Now the pension authority has presented its latest forecast to the government. In this sense, it is estimated that income and supplementary pensions will decrease by 1.5 percent next year. It will be somewhere between SEK 100 and 200 per month on average before tax.
But the Pension Agency writes that the forecast it is uncertain and may need to be adjusted downward. In that case, this would mean that income and supplementary pensions will be reduced by more than 1.5% in 2021.
The decrease is due to the fact that income and complementary pensions are governed by what is called the income index. The income index reflects the income trend in society.
With the help of the income index, pensioners as a group are expected to receive an income trend similar to that of those who work. When more people become unemployed, the average income in society decreases and the part of the population that works for work worsens as a group.
– As it stands now, income does not increase at all and affects the average income of the task force, says Ole Settergren, chief analyst at the Pension Authority.
The guarantee pension is not affected of the revenue indexes without being calculated in line with the price increases that KI estimates will be 0.6 percent this year. Therefore, those who have not earned any pension but only have a guaranteed pension do not receive any reduction according to the available forecasts.
Those who have obtained a low-income and premium pension receive a supplementary pension. The part of the guarantee pension is not affected by the reduction, but so is the part of the income pension. This group also receives a small compensation for the reduction of the income pension by increasing the proportion of the guarantee pension when the income pension falls. Reducing the income pension also increases the housing allowance for those who have it.
The government and the pension group, which includes all parliamentary parties except V and SD, want to increase the income pension in the fall of 2021. It is those with a pension between SEK 9,000 and SEK 17,000 per month who will receive the supplement of Income pension which is a maximum of SEK 600 per month before taxes.
Those who have worked for many years and obtained a comparatively high pension are therefore those whose pensions are further reduced. They do not have a guarantee pension, they do not receive a housing subsidy and they do not receive part of the income pension supplement.
