The Earnings-related Pension Insurance Covers All Earnings from Work
Pension insurance secures a livelihood in the event of various long-term risks. The national pension covers everyone living in Finland who meets the minimum requirements for residence. Earnings-related pension security, on the other hand, covers everyone in gainful employment.
In Finland, earnings-related pension security covers almost all gainful employment, and there are several earnings-related pension acts. Wage earners earn earnings-related pension security mainly under the Employees Pensions Act (TyEL), the Seafarer’s Pensions Act (MEL), and as of the beginning of 2017, the Public Sector Pensions Act (JuEL). The Public Sector Pensions Act combines the rules on earnings-related pensions of the Local Government Pensions Act (KuEL), the State Employees’ Pensions Act (VaEL), the Evangelical-Lutheran Church Pensions Act (KiEL) and the Act on the Social Insurance Institution of Finland (KelaL).
Self-employment is ensured under either the Self-Employed Persons’ Pensions Act (YEL) or the Farmers’ Pensions Act (MYEL).
In the private sector, pension security is mostly arranged with insurance contracts. The pension security of wage earners in the public sector is determined automatically under the public sector pension acts based on their employer.
The number of insured persons under the earnings-related pension acts numbered approximately 2.3 million at the end of 2015.
The Finnish earnings-related pension system was created in the 1960s
The earnings-related pension acts came into force in the 1960s. The pension security of employees and officials of the State and municipalities was arranged for also prior to this, but only the new pension acts of the public sector really covered all employees working for a public-sector employer.
Pension security has been improved throughout the years. An extensive pension reform was carried out in 2005, which broadened the scope of earnings for which pension accrues. A new pension reform has taken effect as of 1.1.2017. As a result, the retirement ages will rise gradually, the pension accrual rate has been standardized to 1.5% of the entire gross wage (regardless of age), and two new pension types have been introduced: the partial old-age pension and the years-of-service pension.
A number of new groups have become entitled to pension security in the 2000s. In 2000, an act was passed on accident and pension security for athletes. From the beginning of 2009, researchers and artists working based on a grant were included under the Farmers’ Pensions Act (MYEL). In 2011, the guarantee pension was introduced. It ensures a minimum pension for persons who live in Finland.
Important dates in the history of Finnish pension security expansion
- 2017 Pension reform. Retirement ages will increase gradually. The pension accrual rate is standardised to 1.5% of the entire gross wage. New pension forms: partial old-age pension and years-of-service pension. The rules of the public sector pension
- acts (KuEL, VaEL, KiEL and KelaL) merge into one Public Sector Pensions Act (JuEL)
- 2011 Guarantee pension
- 2009 Researchers and artists working based on a grant included in MYEL
- 2007 TEL, LEL and TaEL combined to make TyEL, where the lower limit for insurance is very low
- 2005 Pension reform, changes included pension accrual from the whole career span incl. retirement
- 2000 Act on Accident and Pension Security for Athletes
- 1998 All short employments/low wage employment covered by pension security
- 1986 Pension Act for certain artists and reporters in employment (later the Pension Act for Performing Artists and Certain Other Employee Groups) (TaEL)
- 1970 Self-Employed Persons’ Pensions Act (YEL) and Farmers’ Pensions Act (MYEL)
- 1967 State Employees’ Pensions Act (VEL, since 2007 VaEL)
- 1966 The Evangelical-Lutheran Church Pensions Act (KiEL)
- 1964 Local Government Employees’ Pensions Act (KVTEL, since 2003 KuEL)
- 1962 Employees’ Pensions Act (TEL) and for short-term employment contracts, the Temporary Employees’ Pensions Act (LEL).
- 1956 The Seafarer’s Pension Act (MEL) and the new national pension act (KEL)