The Inequality of Lifetime Pensions

Research on social stratification has mostly focused on working-age populations. With rapidly aging populations increasing across the rich world, inequalities at older ages are an increasingly relevant part of how contemporary societies are stratified. Here, we highlight an aspect of inequality that has been largely unexamined—the inequality of lifetime accumulated pensions. In contrast to most previous research on old-age inequality comparing social groups, we focused on total-population-level inequality. Using Swedish register data covering the retired population born from 1918–1939, we examined how the total pension income accumulated over an entire lifetime is distributed in Sweden. We found that the lifetime pension is much more unequal than pre-retirement earnings and yearly pension payments. Decomposition analyses show that lifespan inequality is the most important factor in lifetime pension inequality and is more important than differences in prior earnings. The decline in lifetime pension inequality across cohorts is mostly attributable to the decline in lifespan inequality, particularly for men. We also show that potential changes in pension policies and mortality patterns can affect the inequality in lifetime pensions but are limited in magnitude unless they directly affect the number of years of receiving the pension.