Sweden has one of the world’s most stock-market-oriented pension systems.

The Swedish pension system was reformed in the late 1990s under Prime Minister Göran Persson. The old ATP system (a defined benefit pay-as-you-go model) was replaced by a combination of a pay-as-you-go income pension and the new premium pension (PPM), where a portion of contributions is invested in funds chosen by the individual. I wrote more about how this system came about here.

This reform has helped Sweden rank among the top countries globally in household stock ownership, usually right behind the USA.

In contrast, many countries (like Germany) have traditionally kept large parts of retirement savings in cash and low-yield assets — which inflation slowly erodes.

My take: This system has clear advantages for long-term growth and retirement security. More countries should consider something similar.

(Or maybe I’m just a proud Swede.)