Financing and Investments

In Finland, statutory earnings-related pensions are financed mainly by the pension contributions paid each year. However, part of the pensions are financed with funded assets and returns on funds. Employers, workers and self-employed persons pay statutory earnings-related pension contributions. Part of the earnings-related pension contributions are funded into funds governed by earnings-related pension providers. They are under obligation to invest the assets profitably and prudently and to finance an agreed share of the pension from their own fund.

The earnings-related pension is granted and paid by the earnings-related pension provider in which the worker was last insured before retiring. In the cost division carried out by the Finnish Centre for Pensions, the shares of the expenses for paid pensions that are the liabilities of the various actors are sorted out.

Money flows

The pension assets of the earnings-related pension scheme grew in 2018 by 6.1 billion euros, amounting to 196.2 billion euros at year-end.
The premium income of the private sector amounted to 16.9 billion euros and the expenses to 18.0 billion euros. The investment returns were -2.0 billion euros. The public sector income was 9.5 billion and expenditure 10.3 billion euros. The investment returns were -2.2 billion euros.

Statistics on money flows

Financing principles

Statutory earnings-related pensions are financed mainly through the pay-as-you-go (PAYG) system, that is, the earnings-related pension contributions paid in the year in question. Part of the pensions are financed under the partial funding principle by using both earnings-related pension contributions and previously accumulated funds.

Financing principles of earnings-related pensions

Long-term projections (LTP)

The long-term projections project the future of the pension system, 60–70 years. The projections, which focus on statutory pensions, are published every two to three years.

Long-term projections

Earnings-related pension contributions

In Finland, earnings-related pensions are financed mainly by earnings-related pension contributions paid by employers, workers and the self-employed. Check the valid contribution rates.

Earnings-related pension contributions

Statistics on earnings-related financing

The pension assets of the earnings-related pension scheme grew in 2019 by 22 billion euros, amounting to 218 billion euros at year-end. Due to a good investment year, the return on investments amounted to 24.1 billion euros. Pensions paid amounted to 28.8 billion euros and collected earnings-related contributions to 23.0 billion euros. The figures will be specified in June when the financial statements of all pension providers are compiled.

Read more on the financing statistics website