Signal & Brus

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You are 50 years old. Your doctor says you may have two years left to live. Yet the pension system continues planning for your old age. You keep earning pension rights for a future you will probably never experience.

That is an absurd arrangement. Someone who receives what feels like a death sentence and, according to a medical assessment, cannot expect to reach retirement age should have the right to start drawing a pension immediately.

In my earlier post, After 40 years of work, a pension should be earned, I argued that years worked should count more than one’s birthday. Here there is an even stronger reason to depart from a rigid age limit: life may end before that limit is reached.

Saving for an old age that will never come

Pension saving rests on a reasonable idea: give up part of your income now in return for security later. But when an incurable illness means that this later life will probably never come, the idea loses its meaning for the person affected.

Even someone receiving sickness compensation continues to earn public pension rights. Insurance may also allow occupational-pension contributions to continue. This is important protection for someone who will later grow old. But for a person who may have two years left, the question is brutal: why does the system still prioritise supporting them fifteen years from now?

That money and those pension rights should be able to help while the person is still alive: time with family, a trip if health permits, or simply less financial anxiety during an already difficult period.

A right even before age 55

The right should cover earned public pension, occupational pension and access to locked private pension savings. Someone unlikely to reach 55 should not have to wait until 55 to use their savings.

Exceptions already exist. In some cases, an individual pension savings account can be paid out before age 55 when the holder is entitled to sickness compensation, but normally over at least five years. The Swedish Tax Agency may also grant an exemption for early termination in cases of serious, life-threatening illness. This requires an individual assessment and approval from the bank or insurance company.

The possibility of applying for an exception is still different from a clear right. Withdrawal rules should reflect the documented prognosis so the money can actually be used during the time that remains. Nobody should have to spend a significant part of their remaining life trying to gain access to their pension savings.

Calculate the full cost

Such a reform need not be as expensive as an isolated pension calculation might suggest. If coordinated rules allow the pension to replace all or part of sickness benefit, sickness compensation and other income-support payments, spending elsewhere in the system may fall.

This would not happen automatically under today’s rules. The coordination would need to be designed and the net cost calculated. The public pension is also a shared insurance system, not an ordinary bank account that each person can empty.

But the entire picture should be calculated: new pension payments, reduced benefits and administrative costs. Moving an expense between systems does not mean the whole amount is a new cost. There is reason to examine whether the additional cost could be limited.

The prognosis should open a door

Doctors cannot give an exact date of death. Entitlement should therefore be based on a documented assessment of an incurable, life-limiting illness and the likelihood that the person will not reach the normal withdrawal age. Processing should be fast and the conditions easy to understand.

It should be a voluntary choice. Anyone who wants to continue working should be allowed to do so. Someone who lives longer than expected should not face repayment demands because the prognosis proved too pessimistic, and continued financial protection must remain available.

We accept that the pension system is adjusted when average life expectancy rises. It should also be capable of adjustment when an individual person’s life becomes dramatically shorter.

Someone who will have no old age should at least be able to use their pension while life is still going on.

This translation was prepared with AI assistance from the author’s Swedish article. The original was developed with AI assistance, and its featured illustration is AI-generated.