Year-by-year changes in financing
Financial regulations on statutory pensions are amended annually. Amendments may be made to earnings-related pension acts, the actuarial assumptions governing pension providers’ insurance operations or the criteria for the division of liability relating to money flows between pension providers. The Government bills and the grounds for the assumptions include more detailed information on the adjustments.
- The average contribution rate under the Employees Pensions Act (TyEL contribution) was 24.81 per cent of wages.
- The TyEL contribution included a component of 0.41 percentage points which was the TyEL contribution discount granted in 2020, now recovered from employers.
- The earnings limit for the pension institution’s liability to fund the disability pension was raised by excluding the shortest employment contracts of a few months on average at most from the scope of funding.
- Several changes to the experience rating model for companies subject to the Employees Pensions Act were confirmed. For example, rehabilitation benefits of more than two years will affect the employer’s contribution category in the future.
- The average contribution rate under the Employees Pensions Act (TyEL contribution) was 24.84 per cent of wages.
- The TyEL contribution included a component of 0.44 percentage points which was the TyEL contribution discount granted in 2020, now recovered from employers.
- As of 1 January 2023, the administrative expenses of the TyEL contribution was determined for each TyEL pension insurer based on the actuarial assumptions confirmed for each TyEL pension provider separately.
- The contribution component based on pension expenditure of Keva’s member corporations was abolished. As of 2023, the municipalities and health and social services counties pay a wage-based contribution as well as a pooled component in euros.
- The calculation paradigm of the supplementary coefficient was amended, allowing for negative values in cases of poor solvency. The values of the return of equity (ROE) and the supplementary coefficient were calculated per month as of the beginning of 2023.
- The average contribution rate under the Employees Pensions Act (TyEL contribution) was 24.85 per cent of wages.
- The TyEL contribution included a component of 0.45 percentage points which was the TyEL contribution discount granted in 2020, now recovered from employers.
- As of 1 January 2022, the general actuarial assumptions relating to insurance under TyEL were updated as far as the assumption model (Z model) for disability pensions was concerned. The parameters of the model were updated to correspond to the currently observed termination of disability. The impact of the updates on pension-provider-specific disability liabilities were transferred to the provision for pooled claims of TyEL and MEL pension providers.
- The annual final schedule for the division of cost was brought forward from the autumn to the spring.
- The act on industry-wide pension funds and company pension funds came into effect on 1 January 2022 and replaced the previous Pension Funds Act and the Employee Benefit Funds Act. The reform aimed at a structurally clearer regulation in situations such as bankruptcies and transfers of insurance portfolios.
- The average TyEL contribution rate was 24.4 per cent of wages.
- The pension assets on 31 December 2021 were 258 billion euros.
- No client bonuses were paid out in 2021 for the period of reduced contributions in 2020.
- The State’s share of pensions under the Seafarers’ Pensions Act was reduced from 31 to 29 per cent.
- The implementation of earnings-related pensions for the employees of the Bank of Finland was transferred to Keva on 1 January 2021. The provisions on the content of the Bank of Finland’s pensions were transferred to the Public Sector Pensions Act.
- The insurance portfolio of the bankruptcy estate of the pension fund Viabek (transport services) was distributed to four earnings-related pension insurance companies on 30 June 2021.
- The average TyEL contribution was 24.4 per cent during the period 1 January–30 April 2020 and 21.8 per cent for the period 1 May–31 December 2020.
- The pension assets on 31 December 2020 were 225 billion euros.
- To mitigate the effects of the corona pandemic, the TyEL contribution was reduced by 2.6 per cent for the period 1 May–31 December 2020. The reduction applied to the employer’s contribution but not to the employee’s or the self-employed person’s contribution. The temporary reduction of the TyEL contribution affected the pooled component of the contribution under MEL. The reduced contribution (worth €1,075 billion) was regulated to be recovered in the period 2022–2025.
- Several temporary amendments were made to social security and labour market legislation during the corona pandemic. Among other things, conditions for redundancy and for receiving unemployment benefits were eased, creditors’ right to file for bankruptcy was limited and companies were given an extra three months to pay earnings-related pension contributions.
- The supplementary coefficient of the second and third quarters of 2020 were set at zero, contrary to the benchmark calculated by the Finnish Centre for Pensions. The benchmark was 1.16 per cent in the second and 0.02 per cent in the third quarter.
- The Finnish Centre for Pensions’ cost contributions were temporarily reduced following the sale of its premises.
- The TyEL and YEL cost shares were cut by around 7 per cent.
- The average TyEL contribution rate was 24.4 per cent of wages.
- The pension assets on 31 December 2019 were 218 billion euros.
- The national electronic data base Incomes Register was introduced on 1 January 2019.
- The structure of the public sector earnings-related pension contribution changed. For Keva’s member corporations, the contribution component based on early retirement was replaced by the disability pension contribution, which is part of the wage-based contribution. Some of the municipal-sector employers continued to pay a contribution based on pension expenditure which is based on pensions accrued before the year 2005. The contribution of state employers changed structurally to correspond to the wage-based pension contribution of Keva’s member corporations.
- The implementation of the TyEL contribution changed when the Incomes Register was introduced. The contribution determined in connection with each wage notification was immediately final and fell due for payment at a date set by the policy holder. No interest was paid for contributions paid in advance.
- Veritas Pension Insurance Company and the Insurance Company Pensions-Alandia merged on 1 January 2019.
- The Unemployment Insurance Fund and the Education Fund merged and became the Employment Fund.
- The average TyEL contribution rate was 24.4 per cent of wages.
- The pension assets on 31 December 2018 were 196 billion euros.
- As of 1 January 2018, the distribution basis for client bonuses of earnings-related pension insurance companies was determined according to actuarial assumptions established separately for each TyEL company.
- The degree of equity-linkage in the fund transfer obligation according to Section 168 of TyEL was increased to 0.2.
- Earnings-related pension companies Ilmarinen and Etera merged as of 1 January 2018.
- The average TyEL contribution rate was 24.4 per cent of wages.
- The pension assets on 31 December 2017 were 202 billion euros.
- The earnings-related pension reform came into force.
- The structure and funding of the TyEL contribution was reformed.
- The component for the old-age pension was collected from people aged 17–68 until the onset of the old-age pension.
- The funded component of the old-age pension contribution decreased from 0.5 to 0.4 per cent of the annual earnings.
- The mortality factor that determines the capital value of old-age pensions was reformed on 31 December 2016.
- The administrative expenses were reduced by 7.1 per cent.
- The equalisation amount of the technical provisions of earnings-related pension providers was consolidated with the unallocated insurance reserve. This also affected the calculation of client bonuses and the supplementary coefficient. In the future, the surplus or deficit of insurance operations are monitored with a moving average.
- The degree of equity-linkage in the obligation to transfer into funds according to Section 168 of TyEL was 0.15.
- Statutory old-age retirement ages and the age at which the funding of private-sector disability pensions ends changed. The ages at which funding ends were confirmed in the actuarial assumptions and based on the statutory cohort-specific retirement ages projected by the Finnish Centre for Pensions.
- The supplements of private sector old-age pension funds were made on 31 December 2017 for both 2016 and 2017 to a total amount of 3.6 billion euros.
- Exceptions to the experience-rated disability component of TyEL contributions of large employers were determined for accidents during leisure time, rail transport accidents and disabled workers.
- The Public Sector Pensions Act (JuEL), into which the Local Government Pensions Act (KuEL), the State Employees’ Pensions Act (VaEL) and the Evangelical-Lutheran Church Pensions Act (KiEL) merged, came into force. The Public Sector Pensions Act also applied to employees of the Social Insurance Institution of Finland (Kela).
- Among other things, the competitiveness pact increased the employee’s share and decreased the employer’s share of the earnings-related pension insurance contribution.
Below are amendments made to the financing regulations in different years (in chronological order). For more extensive descriptions of changes to pensions, go to the website “Year-by-year changes”.
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