three - year periods since 1997. these three - year periods roughly follow the agreement periods. 2 actual inflation has been close to the target for three of the agreement periods. during the other three periods, inflation has been much lower. after two periods of being close to the inflation target, average price levels have not increased during the most recent agreement period. how have wages developed since the inflation target was introduced? during the period 1970 – 1992, when there was neither an inflation target nor an industrial agreement, nominal wages in the whole of the swedish economy increased by on average 8. 9 per cent a year. this is shown in figure 3. but as inflation was so high, the increase in real purchasing power was very limited. real wages actually increased by an average of only 0. 7 per cent a year. during the period 1997 to 2014, nominal wages in the swedish economy as a whole have increased by an average of 3. 3 per cent per year ( see figure 3 ). and as inflation has been low, real wages have increased by 2. 1 per cent a year. let me summarise : the period with an inflation target and the industrial agreement have meant lower nominal wage increases, but at the same time higher real wage increases as inflation was much lower than before. have the wage increases varied substantially between the three - year periods since 1997? figure 4 shows how nominal and real wages have increased during the six three - year periods since 1997. 3 nominal wages have increased at their lowest by an average of 2. 8 per cent a year. this is the case during the two most recent three - year periods, that is, the time since the financial crisis in 2008 - 2009. the three - year period 2001 - 2003 is the one with the highest nominal wage increases ; 4 per cent a year on average. looking at real wages, on the other hand, recent years have seen the highest increases since 1998 - 2000, the first agreement period following the signing of the industrial agreement. if we summarise, there is no doubt that the years with a combination of inflation target and industrial agreement have led to much higher real wage increases than the previous years without an inflation target or the industrial agreement. where are we now? that is what has happened so far, but where are we now? i think there are three important things so study when looking at the current situation and which have significance for the smooth functioning of price - setting and wage formation. the first concerns the low inflation rate

. in this respect, a further development of risk - pricing would help gain deeper insight into risk differences between pension systems. this brings me to a second key issue in the design of corporate pension plans : how to decide on investment policy and who should bear the residual risks? investment policy and responsibility let me put this more bluntly : is a shift to defined contribution schemes the optimal way to reduce pension risks for employers? i doubt it. in 401 ( k ) plans, the individual decides what part of his wage he wishes to transfer to his 401 ( k ) account. moreover, notwithstanding recent initiatives that offer participants responsible investment - packages as a default, the majority of the plans still give contributors a substantial say in the investment policy. this all means that many 401 ( k ) plans rely heavily upon individual responsibility as well as financial literacy. however, not everyone is able to understand the complex world of pension finance, as the average employee is not as well educated in finance as you all probably are. let me clarify this by asking two basic questions, which were also put to a large group of american workers : • suppose you have €100 in a savings account and the interest rate is 2 percent per year. after five years, how much do you think that you would have in the account if you left the money to grow : more than, less than, or exactly €102? • now imagine that the interest rate on your savings account is 1 percent per year and inflation 2 percent per year. would you then be able to buy more than, exactly the same as, or less than today with the money in the account? it may come as a surprise to you, but research has shown that over 50 percent of us pension plan participants could not answer these two simple questions correctly. and add to this, as pension - expert david blake noted more than once, that 50 percent of the individuals does not even know what 50 percent is! moreover, the man in the street is not an expert on risk diversification : in for example the well - known enron case, employees had invested 60 percent of their 401 ( k ) assets in enron stock. on average about one - fifth of all 401 ( k ) assets are invested in own company stock. although this is understandable since an employee is always relatively confident of his own firm ’ s prospect, this again leads to the undesirable situation where human and financial capital are tied to the wellbeing of one and the same firm