The current system counts a person's income for the past three years. That means that the system reduces a retiree's payment if the country is in an economic boom and raises it while in a recession.
The new proposal would instead calculate the payout by counting a person's income for the past year and adding a prognosis for the next year.
"It's important to keep in mind that this new proposal would not increase the monetary amount in the pension system," says manager, Ole Settergren, at the Swedish Pensions Agency.
Retirees find it hard to plan their budgets when their pension fluctuates from year to year.
Curt Person, the National Pensioners' Organisation chairman, believes the proposal would help retirees. "We have been asking for this change for a long time," he says.