Earnings-related Pension Contributions Under the Public Sector Pensions Act in 2017

Keva’s member organisations include municipalities and federations of municipalities.

Year Employer’s contributions,
% of gross wage
Employee’s contribution,
% of gross wage
Under 53 and 63 or more 53-62 years
2017 17.05 6.15 7.65

The wage-based employer contribution  is 17.05 per cent.

The total amount of pension expenditure for pensions taken early varies for large employers based on the granted disability pensions. The total expenditure is roughly 149 million euros (estimated at 0.9% of the wage sum of Keva’s member organisations). For small-scale employers, the total expenditure for early pensions is 0.9 per cent of the wage sum.

In addition, some employers pay a contribution based on pension expenditure to a total amount of  663 million euros (an estimated 4% of the wage sum). The contribution is used to cover the gap between the contribution level under the Employees Pensions Act and a sustainable contribution level of the pension system of Keva’s member organisations.

In addition, employers of Keva’s member organisations pay the employee’s share of the contribution that it has withheld from their employees’ wages. It is of the same amount as the employee’s contribution under the Employees Pensions Act.

The total contribution accrual is estimated at 28.50 per cent of the combined wage sum of Keva’s member organisations.

The State’s Contribution in 2017

The State’s pension contributions are charged as follows in 2017:

% of gross wages Total contribution Employees’s contribution
Under 53 or 63 and over 53-62 years
General tariff category 21.22 6.15 7.65
Those who choose to retire at 55, 58, or 60, or who have these cut-off points 26.47 6.15 7.65
Soldiers 32.99 6.15 7.65

In addition, the State contribution includes an employer-specific disability risk component (0.69% on average) and an administrative fee (0.32%). The figures are overall contribution rates and include the employee’s contribution.

The total contribution accrual is estimated at 23.60 per cent of the wage sum of the State’s pension system. The employer’s share is calculated by reducing the average employee’s share (6.65%) from the total contribution rate.

The state employer pays also the employee’s share of the contribution that it has withheld from the employees’ wages. It is of the same amount as the employee’s contribution under the Employees Pensions Act.

Keva collects the State contributions from the employers and pays them to the State Pension Fund.

The State Pension Fund recompenses Keva for handling the State’s pension matters.

The State pensions are paid from reserved funds in the state budget. Assets collected through pension contributions are transferred annually from the State Pension Fund to the budget to an amount corresponding to approximately 40 per cent of the actual pension expenditure. The additional 60 per cent is paid straight from the state budget for the year in question.

The Evangelical-Lutheran Church’s Contribution in 2017

Year Employer’s contribution
paid by Church parsihes
Employers’s contribution paid by the Central Church Fund and
church associations
Employee’s contribution
% of gross wages Under 53
or 63 and over
53-62 years
2017 23.8 27.8 6.15 7.65

Parishes pay an employer’s pension contribution of 23.8 per cent.

The Central Church Fund and the church associations pay an employer’s contribution of 27.8 per cent.

In addition, a church employer pays the employee’s share of the contribution that it has withheld from the employees’ wages to Keva. It is of the same amount as the employee’s contribution under the Employees Pensions Act.

In 2017, the overall contribution in 2017 is 30.68 per cent of the wage sum. In addition, the parishes pay a separate pension fund contribution that amounts to 4.0 per cent of the most recently confirmed church tax.

The pension contributions of the Evangelical-Lutheran Church are paid to the Church Pension Fund. Keva collects the contributions from the employers. The Church Pension Fund collects the pension fund contribution from the employers.

The Church Pension Fund recompenses Keva for handling the pension matters of  the Evangelical Lutheran Church.

 

 

 

Experts: Jarno Varis, Eeva Poutiainen