Knowing pensions helps people make decisions concerning their own pensions. Knowing pensions also helps people assess the general discussion on pensions and their financing, and to base the assessments on facts.

Trust in the pension system, its future and functionality may also affect the perception of how acceptable pensions are and assessments of one’s own financial situation in retirement.

From the point of view of the functionality and future of the pension system, pension knowledge and trust in the pension system are important research themes.

Knowing pensions

Surveys show that few Finns feel that they know pensions well. Some of the details relating to the pension system are well known while others are not.

Pension knowledge can be approached through perceived levels of knowledge or from the perspective of detailed knowledge.

Few assess that they know pensions well

The 2019 survey on views on pensions examined the pension knowledge of 25–67-year-olds. More than half of the respondents felt that they know pensions poorly or fairly poorly. Every ninth respondent assessed that they know pensions well or fairly well.

The 55–67-year-olds, the self-employed and pensioners felt that their knowledge of pensions is better than average. Women, the 25–34-year-olds, those with a basic education and those in low-income households estimated that their knowledge of pensions is poorer than average

How well do you think you know pensions? Of all respondents, 2% felt they know pensions well, 9% fairly well, 31% reasonably well, 33% fairly poorly, 23% poorly and 2% do not know. Source: Finnish Centre for Pensions.

Previous surveys (in 2011 and 2014) explored people’s knowledge of the national and the earnings-related pension system. At that time, nearly half of the respondents assessed that they know the pension system poorly or fairly poorly. Less than one fifth of the respondents assessed that they know the national and the earnings-related pension system well or fairly well.

Pension knowledge has also been studied through the Pension Barometer, a survey in which 18–79-year-olds are asked about their views on pensions. Between 2017 and 2022, the perceived knowledge of pensions has improved. The share of persons assessing that their knowledge is poor or fairly poor has dropped from nearly half to less than one third. Correspondingly, an increasing number of persons estimate that they know pensions well or fairly well. Older respondents, in particular, feel that they know pensions better now than before.

Many unfamiliar with the 2017 pension reform

A pension reform came into force as of the beginning of 2017. The retirement age rose as a result of the reform. The reform also changed the rate of pension accrual and the effect of the timing of retirement on the pension amount. In addition, a new pension benefit – the partial old-age pension – replaced the former part-time old-age pension.

Knowledge of the pension reform just before the reform came into effect was rather poor. According to survey data collected in 2015, only 15 per cent of the 25–62-year-olds felt that they have a good or a fairly good understanding of the impact of the pension reform. Older people and those with a higher income felt more often than others that they knew the pension reform well.

Two years after the reform came into effect, there were still gaps in the knowledge of the reform. In the 2019 survey on views on pensions, one third of the respondents stated that they knew that the pension reform came into effect in 2017. Nearly half had heard something about the reform and every sixth (16%) responded that they had never heard about the reform before.

Around half of the respondents said they were aware of the rising retirement age, the possibility of the partial old-age pension and the increase in their pension amount if they postpone retirement. Least well known was the fact that, after the reform, the pension accrual rate no longer varies according to age. Two out of three respondents stated that they had never heard of this before.

Bar chart of knowledge of 2017 pension reform. Did you know that a pension reform came into force in Finland in 2017? Of the respondents, 36% knew, 48% had heard something about that. 48% knew that the retirement age will rise and 38% had heard something about that. Only 10% knew and 22% had heard something about the abolishment of age-dependant accrual rates. Source: Finnish Centre for Pensions.

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Surveys have been conducted to map the knowledge of details of the pension system. Finns know that the retirement age for the old-age pension varies and that a lion’s share of the pension contributions are used to finance pensions. Yet only few know, for example, the size of the pension contributions withheld from their wages.

Varying degree of knowledge of features of the pension system

In the 2019 survey on views on pensions, pension knowledge was measured with five statements concerning details of the pension system. Some of the statements were correct while others were incorrect.

Are the statements correct or incorrect? 72% of the respondents knew that the retirement age is not the same for all. 55% knew that the confirmed income of the self-employed affects not only their pension amount but also the amount of their parental and sickness allowances. Only 24% knew that pension accrues also for taking care of one’s child at home and for studies leading to a degree. Source: Finnish Centre for Pensions.

Most statements were identified correctly as either true or false. The retirement age for the old-age pension, the impact of self-employed persons’ confirmed income and the use of pension contributions were best known. Unemployed person’s right to the partial old-age pension and that pension accrues for childcare at home and studies were less well known.

The subjective views of pension knowledge and the knowledge of details broadly correspond. Younger respondents assessed their pension knowledge to be poorer than average, yet they assessed more statements correctly than average.

More than one in ten Finns could assess the pension contribution level correctly

In the 2019 survey on views on pensions, the respondents were asked to assess how many per cent of their wage a worker and their employer together pay in pension contributions (or the self-employed of their confirmed income). More than half of the respondents said they do not know. A majority of those who provided an assessment underestimated their pension contribution level. Of all respondents, 13 per cent provided an accurate estimate (with +/- 5 per cent error). In 2019, the average combined employee and employer contribution was 24.4 per cent.

Pension contribution estimates. 51% of the respondents did not know, 2% left the question unanswered, 29% underestimated the contribution rate, 5% overestimated the contribution rate and 13% gave a correct estimate. Source: Finnish Centre for Pensions.

Those with a higher education and the self-employed were more often correct in their estimates of the contribution rate than others. On average, men and those with a higher than basic education more often gave incorrect estimates. Women, those with a basic education and those in low-income households were more often uncertain.

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Trust in pensions

Trust in pensions is a multidimensional phenomenon. It can be assessed not only from the points of view of general trustworthiness and functionality but also from the points of view of how the goals of pensions are met, pension adequacy and concerns relating to pensions.

As a rule, Finns trust the pension system

According to the 2019 survey on views on pensions, more than 70 per cent of 25–67-year-olds found the Finnish pension system to be trustworthy.

The over-55-year-olds and those with a tertiary degree trusted the system more often than others. The under-45-year-olds, those living alone and those who felt in poorer health, on the other hand, were more critical.

Responses to the statement “As a rule, the Finnish pension system is trustworthy.” A total of 70% of the respondents agreed or partly agreed. 18% of the respondents partly disagreed or disagreed. Source: Finnish Centre for Pensions. 

Trust in the pension system is also measured via the annual Pension Barometer. According to the survey, nearly three in four 18–79-year-olds had a positive view of the trustworthiness of the pension system. Men and older respondents trusted the pension system more often than others.

The share of persons finding the pension system to be trustworthy has grown since 2017. At the same time, the number of persons taking a critical stance towards the pension system has dropped from one fourth to less than one fifth.

Replies in 2017–2022 to the statement “I trust the Finnish pension system.” The share of persons taking a critical stance towards the pension system in Finland has dropped from 25% to 16% in the last six years. The share of persons taking a positive stance has risen from 59% to 72%. Source: Finnish Centre for Pensions.

Experience of continuity and inequality affect trust

According to the 2014 survey on trust in pensions and the 2019 survey on views on pensions, trust in pensions is boosted by the following: the perception of a secure and continuous system, trust in the Finnish welfare state, a transparent and developing system, and funded pension assets.

Trust in pensions is reduced by the following: experiences of inequalities, an insecure economic and employment situation, an ageing population and changing or weakening benefits.

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The 2019 survey on views on pensions maps the views on the current pension system and its future. The views were divided on several questions.

Views on current status of the pension system vary

Slightly less than half of the respondents found that pensions ensure a reasonable income for current retirees. Nearly as many were critical about the adequacy of pensions.

An ample one third felt that pension assets were managed reliably, while one quarter disagreed fully or partly.

Only around one quarter of the respondents found the pension system to be fair, while nearly half disagreed.

Bar chart. Share of persons who agree or partly agree with statements relating to views on the current and future status of pensions. Source: Finnish Centre for Pensions.

Men, those with a higher education and those who perceive they are of good health were more positive towards the current status of the pension system than the others. The views of the current status of the pension system did not differ between the age groups. Pension asset management was trusted more often by high-income persons than by others. More often than others, pensioners perceived the pension system to be fair.

Future of pension system less trusted than the current situation

Only an ample one fourth of the respondents assessed that the system will be able to pay pensions in the future, and more than half felt that the payment burden of the young is too high.

Women, the young and those who perceived their health to be poor were more critical towards the pension system’s ability to pay pensions. The young and the respondents who did not have children were more often worried about the payment burden of the young.

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Several questions about income, decision-making and economic outlook related to the functions of the pension system. Trust in the pension system can be measured also through concerns about these issues.

Income concerns the most

Factors relating to income in retirement causes most concern. Three in four of the respondents of the 2019 survey on views on pensions were at least somewhat concerned about the livelihood of low-income pensioners. Around two in three were concerned about access to affordable social and health services.

Slightly less than two in three respondents were concerned about the uncertainty surrounding the conditions of retirement and political decision-making, the ageing of the population and economic and employment trends. Least concern was caused by pension asset investment risks.

Replies to statement “Are you concerned about the following issues relating to pensions?” For example, 75% of the respondents were fairly concerned or very concerned about the livelihood of low-income pensioners. The study examined the degree of concern for income in retirement, decision making and economic factors. Source: Finnish Centre for Pensions.

As a rule, men and those who perceived that they were in good health were less concerned than others regarding all presented statements. The young and those with a tertiary degree, on the other hand, were less often concerned about income in retirement and pension asset investment risks.

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Research on trust and pension knowledge at the Finnish Centre for Pensions

Monitoring pension knowledge and trust in the pension system is part of the research programme at the Finnish Centre for Pensions. Surveys measuring pension knowledge and trust are conducted at regular intervals. Below we present information on these surveys.

The pension barometer is an annually conducted survey that explores the views of Finnish citizens on pensions. Each year, around one thousand 18–79-year-old Finns have responded to the survey. In 2017–2022, the barometer has been conducted as part of an interview survey that Kantar TNS Oy conducts by phone.

The pension barometer examines Finns’ perceptions of how well they know pensions and will manage financially in retirement. The survey also includes statements on how the pension system works and whether it achieves its objective of providing an income. It also maps the general trust in the pension system and its future.

In 2019-2021, the barometer has examined Finns’ views on the principles of the pension system, such as its coverage, how contributions and pensions are linked to income and views on alternative ways to strengthen the financing of the pension system. In 2020 and 2021, the survey included questions on the impact of the corona pandemic on the trust in the pension system and the respondents’ income. In 2022, the survey included questions on pension knowledge and the pension record.

Publications

A report on the results of the pension barometer is published every year. It also includes comparisons with results from previous years. The reports are published in the Julkari publications archive.

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Knowledge of the pension system, views on its operation and how it reaches its goals, as well as the trust in pensions have been examined since the early days of the Finnish pension system.

The survey on trust in pensions in 2011 and 2014, examined the trust in the pension system and pensions, as well as financial preparedness for retirement. The 2019 survey on views on pensions included several questions that were included in previous surveys. This made it possible to examine changes in perceptions. The surveys also include an open response section based on which the trust in pensions has been examined qualitatively.

The 2019 survey on views on pensions examined, for the first time, also pension knowledge with detailed and objectively measurable questions. The survey included questions on the overall trustworthiness of the pension system, its current state and future outlook, as well as on what concerns people have about pensions.

The 2019 survey on views on pensions was conducted in September-December 2019. The survey was sent to 5,000 randomly selected Finnish citizens aged 25–67 years. 1,757 persons responded to the survey.

The next survey on Finns’ knowledge of and trust in pensions is planned to be carried out in 2024.

Publications

Research reports and articles have been written based on the 2019 survey on views on pensions and the 2011 and 2014 surveys on trust in pensions.

Studies published based on 2011 and 2014 surveys on trust in pensions