Working life and its development 

In an earnings-related pension system, continuous employment, career progress and earnings growth across the life course are key factors in determining economic wellbeing in old age. This project aims at investigating working life length, career breaks, job changes and earnings mobility across the life course, how they are linked and how they impact pension income. Moreover, it aims at analysing whether the relation between career stability and earnings mobility has changed across cohorts and whether the changing parameters of the Finnish pension system had an effect on how work and earnings translate into pension accrual. The project uses the ansiokehitys (AK20) data on earnings, pensions and employment spells for representative samples of birth cohorts 1905–1980 and spanning the years 1963–2019.

Schedule: 2020–

Researcher: Aart-Jan Riekhoff

In the face of population ageing, most industrialised countries search for ways to extend working lives as a means of improve the sustainability of their pension systems. A broad range of reforms has been implemented, including the closing of early exit pathways, the raising of official retirement ages and strengthening the financial incentives to work longer. At the same time, there is growing awareness of the need to invest in workers for them to be able to continue working, for example by promoting lifelong learning and healthy behaviour. However, whereas an overall trend towards longer working lives can be observed, there are differences between countries and inequalities between groups within countries. In this project, we aim to analyse the mechanisms of extending working lives from a comparative perspective. In addition, we aim to identify whose working lives are extending and whether there are differences between the genders and socioeconomic groups.

Schedule: 2020–

Researches: Kati Kuitto, Aart-Jan Riekhoff, Liisa-Maria Palomäki, Jan Helmdag (University of Stockholm)

Publications:

Life-course trajectories have become increasingly important for retirement and pensions as recent reforms have strengthened the link between lifetime employment and benefits, introduced measures to lengthen working lives and increased the role of private supplementary pensions. At the same time, life-courses are increasingly fragmented due to diversified and discontinuous employment, family dynamics, and migration. These developments raise concerns about the adequacy of pensions as well as socioeconomic and gender inequalities in old-age income not only for current, but also for future retirees. The articles of this special issue deal with life-course effects on inequalities in retirement and pensions. The collection provides strong empirical and comparative evidence based on micro- and macro-level data from affluent democracies across Europe and the OECD.

Schedule: 2019–2021

Researches: Kati Kuitto, Susan Kuivalainen, Katja Möhring (University of Mannheim)

This book project deals with labour market risks that challenge old age security. The contributions focus particularly on deteriorating labour market prospects among younger labour market generations, reflected in rising risk of unemployment and a disproportionate affectedness by new, atypical and in parts precarious work forms. These changes make it harder for current labour market generations to make sufficient savings for old age, given the lack of continuity in (sufficient) income. The book project is part of the EU COST Action CA17114 “YOUNG-IN – Transdisciplinary Solutions to Cross-Sectoral Disadvantages in Youth”.

Schedule: 2020–2022

Researchers: Kati Kuitto, Dirk Hofäcker (University of Duisburg-Essen)

Thanks to the most recent pension reforms, pension starts to accrue at a younger age than before. As of the 2005 reform, earnings-related pension started to accrue as of age 18 (instead of 23, as before). As of the 2017 pension reform, earnings-related pension starts to accrue as of age 17. This means that, more often than before, the earnings from a worker’s entire working life affect their accrued pension. However, the working of the youth and young adults has not been examined in detail. In this research project, we use the Finnish Centre for Pensions’ register data to examine how common it is for the young to work, what type of work they do and how background variables are linked to working. In addition, the aim is to illustrate how the work of the young affects their pension accrual. This research project offers new information to support the assessment of pension reforms.

Schedule: 2020–2021

Researchers: Ilari Ilmakunnas, Kati Kuitto, Susan Kuivalainen, Aart-Jan Riekhoff, Janne Salonen

Publications:

In recent years, working in retirement has become increasingly more popular. In this project we examine how working in retirement has changed in recent years and how long the periods of working in retirement are. Working in retirement is examined both among those on a disability pension and those on an old-age pension. The data is based on composite data of income distribution and pension register data. 

Schedule: 2020–

Researchers: Anu Polvinen   

Retirement 

In this study, we examine how the retirement intentions have changed between the years 2008 and 2018 and what underlies the intentions. We pay particular attention to how the 2017 pension reform has affected wage earners’ retirement intentions. Our study is based on data from the 2008 and 2018 Finnish Quality of Working Life Surveys, combined with register data of Statistics Finland and the Finnish Centre for Pensions. The study focuses on wage earners between the ages of 50 and 62.

Schedule:2020–2021

Researchers: Satu Nivalainen, Noora Järnefelt

Retirement on a disability pension and receiving a sickness allowance have become less common in the 2000s, but in the last few years, the number of persons receiving these benefits has grown, particularly due to mental disorders. In this study, we examine trends relating to disability pension claims, retirement on a disability pension and rejected disability pension claims, and related predictive factors, particularly from the point of view of the benefit processes.} We examine the labour market position and the receiving of different social security benefits as predictors of retirement and pension claim rejections. The study is based on combined register data of Kela, the Finnish Centre for Pensions and Statistics Finland that covers the entire population of Finland. The research questions include: How has claiming and retiring on a disability pension developed in the 2000s in different population and diagnosis groups when looking at earnings-related and national pensions as a whole? Have the factors that predict retirement on a disability pension and the process of retirement on a disability pension changed in the 2000s? What is the labour market position and use of social security benefits of disability pension applicants before and after claiming a disability pension when considering also the rejected claims? The study is done in cooperation with Kela.

Schedule:2020–2025

Researchers: Mikko Laaksonen, Jenni Blomgren (Kela), Riku Perhoniemi (Kela), Anu Polvinen

In terms of extending working lives, it is important to know employers’ position on retirement and on continued working among workers who are approaching retirement age. The earnings-related old-age pension is flexible. The pension recipient can choose when to retire: anytime between their legal retirement age and the age when their pension insurance obligation ends. These age limits will rise gradually due to the 2017 pension reform. In this project we will examine employers’ positions on the rising age limits in general and in light of their own workers. We will also examine employers’ positions on an ageing workforce, personnel policy and their willingness to employ persons who are approaching their retirement age or who have already retired.

A questionnaire survey with public and private sector employers of different sizes will be conducted in 2021 to find out the position of employers on the above-mentioned issues. A similar survey was conducted by the Finnish Centre for Pensions in 2004 and 2011. The most recent survey will be conducted so that the results of the central questions are comparable with those of previous surveys.

Schedule: 2020–2022

Researchers:  Noora Järnefelt, Mikko Laaksonen, Jyri Liukko, Aart-Jan Riekhoff

We examine which factors increase the likelihood of taking out a partial old-age pension. We are particularly interested in whether the expected life expectancy affects the decision to take out the partial old-age pension. The expected life expectancy is estimated through the lifespan of the parents. The dataset includes the register data of the Finnish Centre for Pensions of persons who would have qualified for a partial old-age pension in 2018 and those who took it out. The data is supplemented with data on the parents’ birth and death years found in the registers of the Finnish Centre for Pensions.

Schedule:2020–2021

Researchers: Satu Nivalainen, Sanna Tenhunen, Susan Kuivalainen

The main aim of this study is to explore occupational class differences in retirement on a partial and full disability pension due to different diseases in Finland. The data is register data from the Finnish Centre for Pensions and Statistics Finland. Occupational class differences in retirement are studied separately for those working in the private and the municipal sector. Cox regression models are used to model retirement on a full and partial disability pension.

Schedule: 2020–2021

Researcher: Anu Polvinen

The project is based on the agreement made by the social partners in 2019 in which the Finnish Centre for Pensions was assigned the task to examine how the decision practices of vocational rehabilitation and earnings-related pension legislation correspond to each other, how the processes function and what the effects of vocational rehabilitation are. In this report, we examine legislation relating to rehabilitation within the earnings-related pension scheme, legal grounds and application directives. In addition, the report includes a review of domestic research on the effectiveness of rehabilitation within the earnings-related pension scheme and the functionality of the processes. The decision practices in relation to legislation, as well as the appropriateness, functionality and efficiency of rehabilitation within the earnings-related pension scheme are handled based on interviews with pension experts. For the report, we interviewed expert physicians and rehabilitation experts of earnings-related pension providers as well as the experts of the Pension Appeal Court. 

Schedule: 2019–2021

Researchers: Jyri Liukko 

Publications:

The individual early retirement (IER) scheme which had relaxed medical criteria, was abolished as an independent program and fused into ordinary disability pension (DP) scheme in 2004. However, the conditions for DP were relaxed to match those under the abolished IER. At the same time, the lowest eligibility age for relaxed conditions was increased from 58 to 60 years. We analyse benefit applications and trends in receipt following the 2004 reform among cohorts affect-ed before and after the reform. Our intention is to analyse the composition of the groups pre/post reform. We use total register data of the Finnish Centre for Pensions from years 1995–2017.

Schedule: 2020–

Researchers: Ricky Kanabar (University of Bath), Satu Nivalainen, Mikko Laaksonen, Noora Järnefelt

The share of fixed-term disability pensions, that is, cash rehabilitation benefits, of all starting disability pensions has increased. Currently more than half of the starting disability pensions are granted for a fixed term. The disability pension is granted as a fixed-term benefit if there is reason to believe that an individual’s work ability can be restored and the person can return to work. A considerable share of the cash rehabilitation benefits is later converted to a disability pension valid until further notice. In this study we use register data of the Finnish Centre for Pensions to examine the conversion of cash rehabilitation benefits to disability pensions valid until further notice and the return to work of persons on a cash rehabilitation benefit.

Schedule:2019–2021

Researchers: Mikko Laaksonen, Heidi Nyman

The main idea of this study is to examine how often partial disability pensioners move to full disability pension and how age, education, employment, employment sector, pension type and cause of disability are associated with retirement on full pension after partial disability pension.

We used register data (70 % sample from Finns) from Finnish Centre for Pension. The data included 5,277 partial disability pensioners aged 2058, whose partial disability pension started in 2010 or 2011. The follow-up time was four years from the beginning of the partial disability pension. Competing risk analysis was used to model full disability retirement.

Schedule: 2019–2021

Researchers: Anu Polvinen, Mikko Laaksonen

Pension adequacy 

This research is interested to study how the duration of disability pension receipt has changed and the associations of these changes with disability pensioners’ average income development in 2000–2020. The project is informed by the observation that disability pensioners’ income tends to lag behind that of old-age pensioners. Average pensions are usually computed on a cross-sectional basis, and therefore the development of pension income is affected not only by changes in pension amounts but also by structural changes in the population of pensioners. As well as looking at structural trends and changes among disability pension recipients (such as age at retirement and pension duration), the research is interested to find out to what extent these changes explain disability pensioners’ modest pension and overall income development. The research material comprises register-based panel data from the Finnish Centre for Pensions and Statistics Finland.

Schedule: 2021

Researchers: Juha Rantala, Mikko Laaksonen

The aim of the pension policy is to secure a reasonable level of income (in relation to pre-retirement level) for all pensioners and to prevent poverty. In this study we review how the pension policy aims have been realised in the early stages of retirement. Changes in income at retirement are measured through the pensioner’s own gross or net income and the household-specific equivalent financial income. Where appropriate, the pension replacement rates are also calculated. When assessing changes to the return we consider, among other things, the income and labour market position before retirement, family background and gender. Special attention is paid to new pension benefits, particularly the partial old-age pension.

In the first stage of the study, the changes in income are calculated for those who retired in 2017. In the second stage, the review is expanded to cover the period 2000–2018. This way, we can examine what type of changes have taken place after the early 2000s in the income of the early stages of retirement and what the replacement rate is at retirement in relation to the pre-retirement income. The research data is the income distribution data panel from 1995 to 2018 of Statistics Finland’s covering the entire household population. The study is carried out in cooperation with senior researcher Marja Riihelä of VATT Institute for Economic Research. The first research results are expected to be published towards the end of 2020. 

Schedule: 2020-2021

Researchers: Juha Rantala, Marja Riihelä (VATT Institute for Economic Research), Marjo Pyy-Martikainen (Kela, the Social Insurance Institution of Finland)

In this article, we look at how households’ age structure, equivalence scales and, more widely, housing are reflected in the economic well-being of retirees. The data consists of questionnaire survey data of the Finnish Centre for Pensions, consumption and wealth data of Statistics Finland and Eurostat’s EU-SILC.

Schedule 2018–2022

Researchers Kati Ahonen, Susan Kuivalainen

Publications:

The aim of this research project is to shed light on the various factors underlying the subjective views of economic well-being of older Europeans. First, we are interested in how subjective economic well-being (SEW) is related to individuals’ income levels, source of income, socioeconomic status and gender. Second, the project pays special attention to how household structure and various household members’ resources affect SEW. Third, we aim to compare countries and identify factors at the macrolevel that influence individuals’ and households’ SEW. The empirical analysis is based on the EU-SILC survey data, in combination with data extracted from other external sources. Results will be published in international scientific journals on ageing and social policy.

Schedule: 2020–2022

Researchers: Liisa-Maria Palomäki, Kati Kuitto, Susan Kuivalainen, Aart-Jan Riekhoff

Life-course trajectories have become increasingly important for retirement and pensions as recent reforms have strengthened the link between lifetime employment and benefits, introduced measures to lengthen working lives and increased the role of private supplementary pensions. At the same time, life-courses are increasingly fragmented due to diversified and discontinuous employment, family dynamics, and migration. These developments raise concerns about the adequacy of pensions as well as socioeconomic and gender inequalities in old-age income not only for current, but also for future retirees. The articles of this special issue deal with life-course effects on inequalities in retirement and pensions. The collection provides strong empirical and comparative evidence based on micro- and macro-level data from affluent democracies across Europe and the OECD.

Schedule: 2019–2021

Researchers: Kati Kuitto, Susan Kuivalainen, Katja Möhring (University of Mannheim)

We continue producing new and up-to-date data on retirees’ perceptions of their livelihood and economic well-being. In the autumn of 2020, we will repeat the questionnaire survey “Pensioners’ income and economic well-being” that we carried out in 2017. The survey, carried out online and by post, is targeted at 55–85-year-old persons on an old-age and disability pension so that part of the respondents are new and part the same as in the previous wave. Our aim is to better recognize factors that affect pensioners’ perceptions of their livelihood and follow changes in these perceptions during retirement.

In our analyses, we focus on reporting on the central indicators (for example, financial satisfaction, covering regular and necessary expenses, consumption). However, we will also produce data on new subjects such as incurring debt, wealth, financial relations between the spouses and causes that prevent working in retirement.

Schedule: 2020–2022

Researchers: Kati Ahonen, Susan Kuivalainen, Anu Polvinen, Liisa-Maria Palomäki, Anniina Kaittila (University of Turku)

Publications:

In this paper, we explain how Canada and Finland diverge interestingly from dominant pension trends, Canada in the Anglo-Saxon context and Finland in the Continental European context. We argue that there is an exceptional resemblance between the developments in these two countries. Crucial in this respect is the deliberate utilization of partial pre-funding and equity investment in trying to secure the economic and social sustainability of public pensions. In both countries, there are counter-tendencies to international pension trends on the benefits side (non-privatization), but, nevertheless, an increasing involvement in global pension fund capitalism on the investment side (marketization). The article broadens the understanding of pensions by highlighting the intertwinement of public insurance and investment in pension arrangements. The analyses are based on academic, governmental and other expert literature and published statistics.

Schedule: 2018–2021

Researchers: Jyri Liukko, Aaron Doyle (Carleton University, Ottawa), Turo-Kimmo Lehtonen (TUNI)

Publications:

  • Liukko, J. & Doyle, A. & Lehtonen, T.-K. (2020) Marketization without privatization. Recent tendencies of pension security development in Canada and Finland. Submitted, under review.

The Pension Barometer examines how well Finns know pensions and how well they think pensions are implemented. The Barometer reveals Finns’ perceptions of how well they will manage financially in retirement and measures their trust in the pension system. The annual survey allows researchers to monitor how people’s opinions, perceptions and trust in the pension system change and develop. 

The Pension Barometer is based on annual telephone interviews carried out five years in a row with 1,000 persons between the ages of 17 and 79 who live in mainland Finland.

Researchers: Mikko Kautto/Jaakko Kiander, Susan Kuivalainen, Sanna Tenhunen

Schedule: 2017–2021

Publications:

In this research project, we address the nature of self-employment, self-employed persons’ income, their retirement intentions and pension insurance from several different viewpoints. We look at the level of the self-employed persons’ pension insurance, particularly at underinsurance. The aim is to find out, among other things, which self-employed persons underinsure themselves and how self-employed persons’ subjective perception and knowledge of pension insurance relate to underinsurance. Finally, we also examine how the self-employed view retirement and what kind of work intentions (for example, working while drawing a pension) they have towards the end of their working life.

The data consists of an Ad Hoc module on self-employment collected in connection with the 2017 Labour Force Survey. We use both descriptive and econometric analysis in our studies.

Schedule: Autumn 2018–2021

Researchers: Satu Nivalainen, Sanna Tenhunen

Julkaisut:

In the most often used measure of poverty, the poverty threshold is based on the distance from the average equivalized household income. Typically, the threshold is set at 50 or 60 percent of equivalent national median disposable income. Despite the approach being popular, limitations are widely acknowledged. It is possible that changes in the poverty threshold can result in households entering or exiting poverty without any actual changes in their living standards. Additionally, it can be argued that this is more likely for some population subgroups than for others. Old-age individuals are likely to be this kind of group. Nevertheless, the poverty measure is widely used to evaluate economic disadvantage and its changes among old-age individuals. The aim of this study is to analyze how the picture of old-age poverty in European countries is shaped by changes in standard of living, employment and poverty thresholds. Changes in poverty rates among old-age individuals are compared to changes in poverty rates among both children and working-age individuals. The analyses are based on EU-SILC survey data.

Schedule: 2021–2022

Researchers: Ilari Ilmakunnas (et al.)

In this study we outline Finnish citizens’ opinions and views on pensions and the reliability and future outlooks of the pension system. In addition, we examine Finns’ assessments of their retirement income and how they have prepared themselves financially for retirement. We also outline how much they know about pensions and of the impacts of the 2017 pension reform and how these impacts may affect retirement.

The study is based on a questionnaire survey sent to 5,000 randomly selected 25–67-year-old Finnish citizens. The dataset is supplemented with register data. The privacy statement (in Finnish) is applied to the processing of personal data.

Schedule: 2019–2021

Researchers: Sanna Tenhunen, Liisa-Maria Palomäki, Jyri Liukko, Juha Rantala, Susan Kuivalainen

Publications:

Financial sustainability of the pension system 

In this paper, we examine reports of national expert groups in Finland and France. These reports were published in 2013 as preparatory documents for a possible pension reform. The goal of the paper is to understand what kind of justifications are used in the context of pension reforms. We compare two countries with different pension systems and different institutional set-up in order to observe similarities and differences in justifying a fair and sustainable pension reform.

Schedule: 2018–2020

Researchers: Niko Väänänen, Jyri Liukko

We will assess how the statutory pension expenditure and the average benefits have developed, as well as the long-term financing of private-sector earnings-related pensions. We will assess the expenditure and contributions with the long-term projection model of the Finnish Centre for Pensions. The model simulates the operations of the statutory pension system and makes it possible to issue projections to meet the forecasting and planning needs of the pension system.

Schedule: Ongoing. Most recent report published in the autumn of 2019.

Researchers: Kaarlo Reipas, Heikki Tikanmäki, Mikko Sankala

Publications: