Earnings-related Pension Benefits
The aim of the benefits under the earnings-related pension scheme is to ensure a reasonable purchasing power in various stages of life.
The earnings-related pension scheme includes the following benefits:
- the old-age pension,
- the partial old-age pension,
- the disability pension,
- the years-of-service pension,
- rehabilitation benefits, and
- the survivors’ pension.
The disability pension and the rehabilitation allowance can be paid as partial pensions.
Number of earnings-related pension recipients at the end of 2023
| Pension | Men | Women | Total |
|---|---|---|---|
| All pension benefits | 685,850 | 832,628 | 1,518,478 |
| Pensions in one’s own right | 676,117 | 810,925 | 1,487,042 |
| Old-age pension | 589,923 | 725,233 | 1,315,156 |
| Partial old-age pension | 31,179 | 25,299 | 56,478 |
| Disability pension | 55,254 | 60,505 | 115,759 |
| Special pension for farmers | 1,197 | 3,723 | 4,920 |
| Surviving spouse’s pension | 25,783 | 182,866 | 208,649 |
| Orphan’s pension | 7,218 | 6,948 | 14,166 |
An individual can get different pension benefits at the same time, so the figures cannot be added up. In the figures for ‘All pension benefits’, an individual is included only once.
The recipients of farmers’ special pensions get the farmers’ early retirement aid which ceased to be granted in 2018.
Earnings-related pension benefits that have already been abolished include the unemployment pension, the part-time pension, the individual early retirement pension and the early retirement pension.
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Earnings-related pensions accrue from work
Pension accrues based on annual earnings and an accrual rate. The earnings-related pension accrues at a rate of 1.5 per cent of the annual gross earnings as of age 17 until the age when the insurance obligation ends. Pension accrues also for
- unpaid periods of earnings-related social security benefits,
- periods of home care of one’s own children under the age of three, and
- studies leading to a degree.
When calculating the pension, the earnings that the pension is based on are adjusted with a wage coefficient. The pension is adapted to the extended life expectancy with the life expectancy coefficient.
The pension is calculated based on the earnings-related pension acts that were in force when working. The pension reform that came into effect at the beginning of January 2017 changed some of the rules. For example, the accelerated accrual rate for older employees has been abolished and the wage earner’s share of the pension contribution is no longer deduced from the pensionable earnings. The pension that has been earned before 2017 is calculated based on the acts that were in force at any given time before 2017.
The disability pension consists of the pension accrued during the work history and a projected pension component that is calculated from the beginning of the year of the pension contingency to the age group’s retirement age. The insured has the right to the projected pension component if their earnings total at least 20,571.69 euros (in 2024) during the ten years before the year in which the disability pension started. As a rule, the projected pension component is determined on the basis of the average earnings for five years before retirement.
In some cases, the public sector accrual rates differ from the private sector rates.
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