The combined pension debt of Sweden’s municipalities and regions hit SEK 619bn at the end of 2025, analysis from Skandia has shown.

It highlighted that while historically high pension costs had driven up debt in recent years, Skandia expected a decline in costs in the short term, presenting a “golden opportunity” to manage the pension debt.

This short-term relief created space for managing pension commitments as part of long-term financial planning, the company argued.

“Municipalities and regions must both finance today's welfare and create the financial conditions for the schools, healthcare and social care of the future,” said Skandia pension economist, Mattias Munter.

“Pension debt is rarely the biggest financial challenge in itself, but it affects the long-term scope for action. It is therefore important to understand how pension commitments develop and plan for them based on the conditions of your own organisation.”

At the end of 2025, Swedish municipalities’ pension debt totalled SEK 254bn, while regions’ pension debt amounted to SEK 365bn.

However, Skandia noted that, following high inflation in 2023 and 2024 that drove up pension costs and liabilities, forecasts indicated lower costs in the short term followed by a gradual normalisation.

Skandia’s report said the conditions for managing pension obligations varied between different parts of the country, with population development, dependency ratio, equity/assets ratio and the size of the pension debt affecting the financial room for manoeuvre of municipalities and regions.

Almost half of municipalities saw their population fall over the past 40 years, with the population expected to decline in around half of the country’s municipalities by 2040.

“The report clearly shows why the pension liability needs to be placed in a larger economic and demographic context,” commented Skandia business manager for public affairs, Ulf Johansson.

“The same liability can mean completely different things in a growing municipality and in a municipality with a decreasing population.

“In addition, SEK 287bn, corresponding to 46 per cent of the total pension obligations, is off the balance sheet as a contingent liability.

“To get a fair picture, you therefore need to look at both the pension obligations and the rest of the economy.”

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