This project examines how the activation of the automatic balancing mechanism in the Swedish pension system affects pensioners’ labour market behaviour and well-being. The mechanism was introduced in connection with the 1998 pension reform and links pension payments to the country’s economic wellbeing. As a consequence, when the liabilities exceed the assets in the system, individuals who have already chosen to retire will receive a temporarily reduced pension. This has a direct impact on their income and may push them back to work. In turn, this can affect their health and well-being. The aim of this project is to examine both these questions.