National Pension Scheme and the Social Insurance Institution
The national pension scheme is administered by the Social Insurance Institution (Kela). In addition to national pensions, Kela also handles other basic social security: parts of the unemployment security (the basic unemployment allowance and the labour market support), family benefits, and the financial aid for students. Kela also pays out health insurance benefits (earnings-related or minimum daily allowance).
National pensions are financed by public funds. Up to 2010, national pensions were partly funded by employer contributions.
The administration of Kela determined in its own act
Kela is an independent social security institution supervised by Parliament. It has its own administration and finances. Its position, responsibilities and administration are determined in the Act on the Social Insurance Institution.
Trustees appointed by Parliament supervise Kela. Auditors selected by the trustees audit its accounts.
The operations of Kela are managed and developed by the Board of Directors appointed by the trustees. The Board has 10 members at the most. The Director General presents issues to the Board of Directors and implements the decisions of the Board.
In addition to the Director General, Kela has two Directors. By law, it can have a maximum of five Directors. The President appoints the Director General and the Directors on the basis of a proposal presented by the Trustees.
Kela’s Nationwide Customer Service issues the decisions
Kela’s organisation is divided into five business units:
- Local Customer Service
- Nationwide Customer Service
- IT Services
- Information Services
- Shared Services
and two operational units:
- Management Support Unit
- Communications Unit
The Nationwide Customer Service business unit is not only responsible for determining benefit claims but also involved in legislative planning and reform efforts in the area of benefit provision. Kela’s local operations are divided into five insurance districts.
Sosiaaliturvan muutoksenhakulautakunta (appeal board of social security) handles appeals relating to Kela’s decisions.
Kela and the earnings-related pension system cooperate
Kela and the Finnish Centre for Pensions cooperate closely and use each other’s register data when processing pension applications. The pension providers and Kela also use each other’s registers when they handle pension applications. The same form is used to apply for a national pension and an earnings-related pension.
Kela is also the contact institution for pension applications sent to Finland from abroad, while the Finnish Centre for Pensions handles and transmits pension applications sent by residents in Finland to other EU/EEA and social security agreement countries.