Survivors' Pension Rights in Occupational and Social Insurance: The Swedish Experience
| DOI | 10.1023/A:1011930607496 |
| Published date | 01 June 2001 |
| Author | Ann-Charlotte Ståhlberg,Jan Selén |
| Date | 01 June 2001 |
| Subject Matter | Article |
European Journal of Social Security, Volume3/2,117-136,
200!.
© Kluwer Law International (KLI). Printed in the Netherlands.
JAN SELEN
ANN-CHARLOTTE STAHLBERG*
Survivors' Pension Rights in Occupational
and Social Insurance: The Swedish
Experience'
117
Abstract: Since the early 1990s, there has been no widow's pension in Swedish
social insurance. This is consistent with the aim
of
implementing an individual
model, in pursuit of the goal
of
economic independence for all adults. However, both
a widow's and awidower's pension are included in occupational insurance schemes.
In Sweden, these are based on collective labour market agreements and cover almost
all employees. The survivors' pension can be seen as an annual non-wage benefit.
As such, it should be taken into account when remuneration from work between dif-
ferent socio-economic groups is compared. However, we cannot directly observe the
individual value
of
mandatory collective insurance. This article is an original
attempt to determine the individual value
of
certain occupational and social insur-
ance rights. A money value for earnings-related survivors' pension rights is estimat-
ed and added to the money wage to create an extended wage measure. We use
Swedish microdata to analyze what the inclusion
of
different insurance rights might
mean for wage differentials and wage dispersion. The study indicates that wage
inequality is understated when non-wage benefits in the form
of
survivors' pension
rights are excluded from the compensation measure and that a more complete pic-
ture
of
wage differentials is obtained when these rights are accounted for.
Ifwe
were
able to consider differences in survivors' pension rights between countries, this
would be a step towards more complete wage comparisons between the different
El.l-countries.
*Jan Selen, Associate Professor of Statistics at the Trade Union Institute for Economic Research,
Wallingatan 38,
SE-III
24 Stockholm, Sweden, E-mail: j.selen.@fief.se;Ann-Chariotte Stahlberg,
Associate Professor of Economics at the Swedish Institute for Social Research, Stockholm
University, SE-I06 91 Stockholm, Sweden, E-mail: Ann-Charlottc.Stahlberg@sofi.su.se.
We are grateful for comments from an anonymous referee and from participants at seminars at the
fourteenth Annual Conference
of
the European Society for Population Economics (ESPE, 2000)
and the Swedish Institute for Social Research. We acknowledge financial support from the Swedish
Research Council and the Swedish National Social Insurance Board.
EUROPEAN JOURNAL OF SOCIAL SECURITY
118
1. INTRODUCTION
In a social policy family model, the wife's entitlement to social insurance benefits is
generally based on
her
status as a dependent family member and on her husband's
insurance entitlements.
If
widowed, she receives awidow's pension, since her
pursuit
of
wifely duties in the home is assumed to make it more difficult for her to
re-enter the labour market. In an individual model, which pursues the goal
of
eco-
nomic independence for all adults, the social insurance system contains no widows'
pension.
It
is rare for any country to apply either the family model or the individual
model in its pure form. The normal case is that both models exist side by side but
one dominates, and that legislation, taxes and transfers are designed accordingly.
Sweden is close to the individual model. The social insurance widow's pension was
abolished in 1990 with certain transition rules.
It
was replaced by an adaptation pen-
sion, given to both
men
and women for a very short period. In the old scheme, only
widows received a social insurance pension. Widower's pensions came from occupa-
tional insurance schemes. Unlike many other countries where occupational insurance
covers a smaller part
of
the labour market, in Sweden these cover almost all employees.
The occupational insurance scheme for private-sector blue-collar workers was the
only one that did not include asurvivors' pension.
The remainder
of
the Swedish survivors' pension is composed
of
a basic social
insurance part independent
of
income and earnings, and an earnings-related part,
partly from social insurance, partly from occupational insurance schemes. The earn-
ings-related social insurance part is
based
on the deceased's income below the social
insurance ceiling, the occupational insurance part is based on income above the ceil-
ing. The beneficiaries are the spouse or cohabitee and any children. The children
receive a pension until the age
of
(at most) twenty. The widow/widower's pension
from social insurance is paid for six months, while the occupational pension is life-
long, providing that the beneficiary does not remarry. Thus, the spouse
of
an
employee who had a high income tends to receive amuch larger pension than the
spouse
of
someone who had a low income. Some people get nothing after a few
months; others get pensions for the rest
of
their lives. These inequalities depend
almost exclusively on the occupational insurance schemes, since social insurance
generally does not offer apension to widows/widowers for more than six months.
The sums that one socio-economic group receives from social and occupational
insurance will differ from the sums received by other groups. A comparison of the ben-
efit levels for different categories conveys some impression
ofthe
distributional effects,
but does not give the whole picture. There is more than one dimension to the direct
effects
of
social and occupational insurance on the distribution
of
income. Insurance
provides security and consequently is
of
value not only during the time it is paid out.
The value varies with the risk and the amount
of
benefit, and both the risk and the level
of
benefits differ between different groups. Further, there may be differences in what
different groups pay for the same insurance protection. In this article we are mainly
interested in the second dimension, that is, how the individual value of survivors' pen-
sion rights varies between different wage-earners. This model
of
income redistribution
effects is studied by means
of
calculations based on Swedish microdata.
EUROPEAN JOURNAL OF SOCIAL SECURITY
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