Sweden Shelves Plan to Use Pension Money for Debt

Sweden's government shelved a proposal to take 96 billion kronor ($13 billion) from the country's four state retirement funds to repay debt after political pressure. 

The Scandinavian country's Social Insurance Board in April proposed that Finance Minister Bosse Ringholm shift the money to pare the state's 1.3 trillion kronor national debt. Ringholm, 61, decided against the plan after meeting opposition parties, said Eva Rosengren, a spokeswoman at the Finance Ministry. 

``For now this is a final decision,'' Rosengren said in a phone interview after the meeting in Stockholm. ``Who knows what could happen in 10 years?'' 

The heads of the pension funds had said that any transfer would raise the possibility of benefits cuts for 1.5 million pensioners in a country known for its cradle-to-grave welfare system. Swedes are the least likely people to be at risk of poverty in the European Union, data show. 

The money in question was equal to about 17 percent of the 560 billion kronor of assets in Sweden's four pension funds. Ringholm's decision may reflect the governing Social Democrat party's reluctance to risk a further erosion of its popularity. 

``It's possible the government just didn't want to take on pensioners after its recent problems,'' said Henrik Mitelman, chief bond analyst at SEB Merchant Banking in Stockholm. ``A debate on pension reductions is the last thing they need now.'' 

Election Showing 

In Sunday's European Parliament elections, backing for the Social Democrats dropped 1.3 percentage points to 24.7 percent. Prime Minister Goeran Persson, who last year failed to convince voters to adopt the euro, faces a general election in 2006. 

Sweden has a population of 8.8 million, with 17 percent of people over the age of 65. Single Swedes are guaranteed a pension of 7,144 kronor a month and married couples get at least 12,370 kronor a month, according to the Swedish Institute. 

A single Swedish pensioner gets 50 percent more a month than the U.K. basic state pension. Retired Swedish couples get almost two thirds more each month in guaranteed pension than their British counterparts, according to data from the U.K. government. 

The Social Insurance Board's proposal came after the Swedish government agreed to take on responsibility for paying disability benefits and pensions when the pension funds were set up in the late 1990s. It received 250 billion kronor of assets at the time and agreed on a review this year to see if that was enough. 

The krona weakened 0.1 percent against the dollar to 7.5476, and strengthened 0.2 percent to 9.1383 per euro.