Earnings-related Pension Benefits are Earned Statutory Provision
- Checking the pension record – the duty of the insured
- Accrued pension retains its value
- Legal protection system garantees legal protection of the insured
- Modes of appeal
- Appealing an EU/EEA pension decision
The earnings-related pension is part of the statutory social security and based on insurance contributions paid from earnings. The earned pension right is subject to the constitutional protection of property.
As of 2008, the insured have received annually a pension record of their private-sector employments. The record contains information on employments and the accrued pension as entered in the records. Public-sector employments will be included in the earnings-related pension record as of 2012.
The insured person is responsible for checking that the data on the pension record is correct as far as private-sector employments are concerned. The pension provider will clarify missing or incorrect data for the most recent years. By 2013, the pension providers’ obligation to sort out the data will be shortened to five years. For data that is older than that, the employee must present indisputable employment facts for the information to be registered. For the public sector, there is no time limit for the correction of data.
At any given time, an employee in the private or the public sector can request a pension record or view his own employment data online. This way the insured can check that his personal data in the registers is correct.
Earnings-related pension accrues based on annual earnings according to an age-dependant accrual rate. The life expectancy coefficient, which affects the pension amount, was introduced in 2010. It is determined on the basis of life expectancy. The earnings-related pension scheme is a defined-benefit scheme, which means that the pension assets do not directly affect the amounts of paid pensions.
Index adjustments are made to retain pensioners’ income level and purchasing power. When calculating the pension, the salary data for the various years are adjusted with the wage coefficient, while the pension in payment is adjusted annually with the earnings-related pension index.
The accrued pension is subject to the vesting principle. Its implementation is ensured by gathering the data on employments and self-employment in the registers of the Finnish Centre for Pensions and the authorised pension providers. The pension providers are jointly and severally liable for fulfilling the pension commitments.
Legal protection in the administration means that the conformity to law are realised and that the rights and benefits of the individuals and the community and their implementation are protected.
The legal protection is ensured with a twofold legal protection system. The aim of preventive modes of appeal is to ensure that issues are solved correctly and according to law at the earliest possible stage. The intention of retroactive modes of appeal is to enable the correction of an erroneous decision and ensure that the procedure is according to law.
The most important guarantee of preventive modes of appeal is the fact that the administrative procedure is governed by law.
Preventive modes of appeal include:
- the processing of cases adhering to the proper form
- rules on disqualification
- hearing of the party involved
- providing reasons for the decisions.
Retroactive modes of appeal are divided into:
- ordinary and extraordinary modes of appeal.
An earnings-related pension decision can be appealed to the Pension Appeal Court. There are separate rules regarding appeals in pension matters of the employees of the Bank of Finland, the Orthodox Church and the regional government of Åland.
The decision of the Pension Appeal Court may be appealed to the Insurance Court. The decision of the Insurance Court may no longer be appealed.
The same appeals process applies to debiting imposed by the pension provider or the Finnish Centre for Pensions and the employer’s withholding of the employee’s pension contribution.
A decision concerning the national pension is appealed to the Social Security Appeal Board Its decision may be appealed to the Insurance Court.
International pension decisions may be appealed in the country that issued the decision. The new EU regulation on social security (883/2004 and the implementing regulation 987/2009) came into force on 1 May 2010. It stipulates that issued decisions may be appealed immediately after receiving the decision. After the summary compiled of all decisions made in EU Member States, the insured may request that the decision of one or several countries be re-examined if the applicant finds that the decisions have a negative synergy on his pension rights.
Decision issued prior to 1 May 2010 may be appealed after the summary of all decisions made in EU Member States has been compiled. However, it has been possible to immediately appeal a decision concerning the prerequisites for receiving a disability pension.