Earnings-related pension recipients in Finland

Earnings-related pensioners now number 1.5 million

At year-end 2018 a total of 1,500,000 persons in Finland received an earnings-related pension, an increase of 16,000 from the year before. This rise in the number of earnings-related pensioners was due to the increased number of old-age pension recipients, as the number of other pension benefit recipients declined from 2017. Over half (55%) of all earnings-related pension recipients were women.

A total of 1,460,000 persons received a pension based on their own work history, that is, an old-age, disability, part-time or farmers’ special pension. Almost 263,000 persons received a survivors’ pension: 250,000 of them were surviving spouses and 13,000 children.

In 2018 earnings-related pension expenditure totalled 27.9 billion euros. The bulk of this, or 24.2 billion euros, consisted of expenditure on old-age pensions. Earnings-related pensions accounted for 89 per cent of total pension expenditure, which was 31.3 billion euros.

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More than half of the new disability retirees get temporary benefits

In 2018, around 19,900 persons retired on an earnings-related disability pension. This was an increase of nearly 1,300 persons compared to the year before. More than half (55%) of the benefits were granted as cash rehabilitation benefits. These benefits have made up more than half of all new earnings-related disability pensions granted since 2012.

The disability pension may be awarded either until further notice or as a fixed-term cash rehabilitation benefit. The cash rehabilitation benefit is granted if there is a chance that the person’s work capacity can be restored at least in part through treatment or rehabilitation. A cash rehabilitation benefit can be granted only if a treatment or rehabilitation plan has been drawn up for the person in question.

More than two fifths (44%) of the new recipients of a cash rehabilitation benefit were diagnosed with a mental disorder. For one quarter of all new recipients of the benefit, the disability was caused by a disease of the musculoskeletal system. All other main disease categories counted for less than 10 per cent each.

The causes for disability of those who were granted a disability pension until further notice were quite different from those who received a cash rehabilitation benefit. Diseases of the musculoskeletal system was the main cause of disability for a clear majority (40%) of the new recipients of a disability pension granted until further notice. Mental disorders was the second largest cause (15%) and diseases of the nervous system the third largest cause (10%) for disability. Nearly as many (9% each) suffered from tumours or diseases of the circulatory system.

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Retirement starts most commonly at age 63

New retirees aged 50-68 years on an earnings-related pension in 2018

The number of people retiring on an earnings-related pension in 2018 was 68,900, down almost 10 per cent from the year before. Almost 25,000 people retired on an earnings-related pension at age 63.

The majority of new retirees, 48,900 persons retired on an old-age pension. Half of them took their pension at age 63. In addition, a total of 10,800 persons took payment of a partial early old-age pension in 2018, almost 90 per cent of them before reaching age 63.

The number of new retirees on a disability pension was 19,900, edging up from the figure in 2017. The number of new disability pensions in 2018 was more than 1,000 higher than the year before, representing an increase of 7 per cent. One-quarter of this increase is attributable to persons under 50 and one-half to persons over 60 years of age.

Persons who have retired on an earnings-related pension, by pension benefit, 2010–2018

Old-age
pension
Disability
pension  
Special
pension
for farmers
All

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|
|
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Part-time
pension
Partial
old-age
pension
2014 50,800 18,800 700 70,300 | 3,400
2015 54,800 18,600 600 74,000 | 3,700
2016 56,800 18,800 200 75,800 | 4,900
2017 56,600 18,600 200 75,400 | 2,300 12,500
2018  48,900  19,900  200  68,900  |  – 10,800

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Description

Earnings-related pension recipients in Finland

Producer: Finnish Centre for Pensions
Website: Earnings-related pension recipients
Subject area: Social security
Part of the Official Statistics of Finland (OSF): Yes

Description

The statistics offers a general overview of all earnings-related pension recipients in Finland.

Data content

The statistics includes central data on all earnings-related pension recipients, new retirees on an earnings-related pension and the earnings-related pension expenditure in Finland.

Categorizations

private and public sector, pension benefit, gender and age, pension amount, disease classification ICD-10; regional classification: municipality, province, country of residence

Methods of data collection and source

The data on earnings-related pension recipients, new retirees and earnings-related pension expenditure are based on the pension register.

The regional data presented in the statistics are based on the population data of the Social Insurance Institution of Finland, supplemented with data on earnings-related pensions taxable at source and paid abroad, as reported by the pension providers.

Update frequency

The more restricted statistics Earnings-related Pension Recipients in Finland is released once a month. The more comprehensive statistics Pensioners in Finland is released once a year.

Time of completion or release

The monthly statistics is released by the middle of the following month and the annual statistics in the autumn of the year following the statistical year. For a more detailed schedule, consult the Release Calendar.

Time series

The statistics has been produced since 1996. In 2005-2013, the statistics was published under the name Pensioners and Insured in Finland.

The Quality Description of the statistics (section “Coherence and comparability of data”) includes more detailed information on the comparability of the time series.

Key words

Social insurance, pension, earnings-related pension, old-age pension, disability pension, disability pension, unemployment pension, farmers’ special pension, part-time pension, partial old-age pension, retirement

Concepts and Definitions

Age

In the tables on persons having retired on an earnings-related pension, the age used is the age at the start of the pension. In other tables it is the age at the end of the statistical year.

The average age is the arithmetic mean of the ages. For recipients of an earnings-related pension the age is calculated from the age at the end of the statistical year, and for persons who have retired on an earnings-related pension, from the age when the pension starts.

The median age is the age for the middle-most observation in the data.

Domicile, country of residence, county

The domicile of a person is seen to be the domicile on the last day of the year. For pensions paid abroad, the country of residence is the country of residence on the last day of the statistical year.

Countries of residence are categorized according to the country categorization valid at the end of the statistical year. Counties are classified according to the regional classification in force at the end of the statistical year.

Earnings-related pension expenditure

Earnings-related pension expenditure includes all statutory pensions from the private and public sector paid during the statistical year, as well as voluntary, registered supplementary pensions paid by the employer, but not pensions paid by the municipalities according to the old local government regulations.

Main cause of incapacity

By main cause of incapacity to work is meant the main disease which is the basis of the pension. Although the reason for the disability may sometimes be a significant   secondary disease in addition to the main disease, statistics are based solely on the classification of main diseases.

Since 1996, the diagnoses and the corresponding codes are based on the ICD 10 classification of diseases. Disability pensions granted before 1996 are based on the previous ICD 9 classification. The classification is primarily carried out according to the new classification of diseases. The codes according to the old classification have been as closely as possible placed in the correct category in the new classification (see Appendix 1).

New retiree on an earnings-related pension

New retirees receiving a pension based on their own work history are persons whose pension based on their own working career (old-age, disability or special farmer’s pension) has begun during the statistical year.  A further requirement is that the new retiree has not received any pension of the aforementioned types for at least two years.

A scheme-based review is always carried out for the scheme in question. If a person has retired from another sector already prior to the statistical year, and is retiring from another sector during the statistical year, he or she is only registered in the latter sector for the statistical year, no longer in the figure of all who have retired. In other words, a person is only entered in figures relating to the whole earnings-related pension scheme in the statistical year during which the first pension begins. The scheme-specific figures of the tables can thus not be added together.

Persons having retired on an old-age pension are persons whose old-age pension started in the statistical year and who have not received a pension of any type in their own right for at least two years. As regards disability pensions and special pensions for farmers, the precondition is that the persons have not received a pension of this type for two years. As regards the different types of disability pension, the precondition is that the persons have not received a disability pension of any type for two years.

Persons retiring on a part-time pension are not considered as all persons having retired on an earnings-related pension. Persons receiving a part-time pension are not included in the figures until the year when their pension is converted to some other pension based on their own work history, usually an old-age pension.

The partial old-age pension, introduced in 2017, is processed in the same way in the statistics as the part-time pension. That means that persons who have retired on a partial old-age pension in 2017 are not considered new retirees.

Pension benefit

The pension benefits in the earnings-related pension scheme are old-age, disability, special farmer’s, part-time, partial old-age and survivors’ pensions. More detailed information about pension types relating to the statistical year (for example basis for granting and age limits) has been presented in the figures for each statistical year in chapter 1.3 Pension benefits.

Pension sector

The tables in the publication include statistical figures covering the whole earnings-related pension scheme as well as figures by pension sector for the private and the public sector.  More detailed information about the sectors is presented in the figures for each statistical year in chapter 1.1. General.

Recipients of an earnings-related pension are always included in the sector from which he or she receives at least one pension under survey. If a person receives a pension from both sectors, he or she is included in the figures for both sectors, but only once in the figures for the whole earnings-related pension scheme.

Persons who have retired on an earnings-related pension are registered in the sector-specific numbers, if retirement from the sector in question occurs in the statistical year. A person is registered in the numbers for the whole earnings-related pension scheme only once, in the statistical year during which the first pension begins.

A person insured for earnings-related pension benefits is always included in the figures of the sector in which said person works (and/or receives a pension).  If a person is working (and/or receiving a pension) from both sectors, he or she is registered in the figures of both sectors.

Recipient of an earnings-related pension

Persons receiving a pension based on their own work history are those receiving old-age, disability, unemployment, special farmer’s, part-time or partial old-age pension during the last days of the statistical year. All recipients of earnings-related pension includes the aforementioned as well as recipients of survivors’ pensions. The earnings-related pension may be paid simultaneously with several different pension acts and types of pensions.

Size of the earnings-related pension 

All monetary amounts given in the statistics are gross monthly pensions. Pension integration may have the effect of reducing an earnings-related pension if a person receives a pension under acts covering specific risks (Motor Liability Insurance Act, Occupational Accidents, Injuries and Diseases Act, Act on Compensation for Military Accidents and Service-Related Illnesses, Act on Compensation for Accidents and Service-Related Illnesses in Crisis Management Duties, Military Injuries Act). The reduction is made to the accrued earnings-related pension. These benefits may be so high that only a small amount or no earnings-related pension is paid out. Persons receiving zero earnings-related pension due to integration are nonetheless included in all figures in the statistics.

The earnings-related pensions of pension recipients and persons who have retired on earnings-related pensions include the euro amounts from both sectors of all pensions based on their work history and which were in payment at the end of the statistical year: old-age, disability, unemployment and farmers’ special pensions. The pensions include the euro amounts of both basic pensions and registered supplementary pensions. If the pensions of new retirees in the statistical year have ended before the end of the statistical year, the pensions include the amounts of all earnings-related pensions in payment when the pension ended.

Recipients of part-time pensions do not simultaneously receive other earnings-related pensions based on their work history. Therefore, the earnings-related pensions of those who receive and those who have retired on a part-time pension include the euro amounts of the part-time pension only.

In addition to the above, the total earnings-related pension includes any survivors’ pension that the pension recipients may receive. Statistics for the total earnings-related pension are included only in the tables for all earnings-related pension recipients (Tables 2 and 2.1) and earnings-related pension recipients residing abroad (Tables 11 and 12). The total earnings-related pension is not calculated for those who have retired on an earnings-related pension.

The average earnings-related and total earnings-related pensions are arithmetic means. Tables 5 and 16 also show the median pension. The median
pension is the pension observed at the mid-point of the material, i.e. half of the pension recipients receive a pension that is lower than the median and half receive a pension that is higher.

Unpaid period

Period for which a person receives a social security benefit for which pension accrues. Unpaid periods are, for instance, periods of parental allowances, periods of sickness allowance and unemployment allowance.

Quality Description

Quality description: Pensioners in Finland 2018

The statistics Earnings-related pensioners in Finland is published by the Finnish Centre for Pensions.

The Act on the Finnish Centre for Pensions states that the responsibilities of the institution include, for example, the compiling of statistics in its field of operation. The production of the statistics at the Finnish Centre for Pensions is handled by the Planning Department.

The Earnings-related pensioners in Finland is financed by the Finnish Centre for Pensions.

Relevance of statistical information

Statutory pension security in Finland consists primarily of two pension schemes: the earnings-related pension scheme and the national pension scheme. The pensions of the former scheme are based on earnings, while the pensions of the latter scheme are residence-based. Earnings-related pensioners in Finland provides an overview of the pensions paid within the Finnish earnings-related pension scheme.

In the private sector, the earnings-related pension provision is administered by earnings-related pension insurance companies, industry-wide pension funds and company pension funds. The Finnish Centre for Pensions is the central body of the earnings-related pension scheme. One of its assignments is to collect the information required for the administration of earnings-related pension matters for the purpose of handling the tasks prescribed to it.

Earnings-related pensioners in Finland covers the whole statutory earnings-related pension provision, as well as voluntary registered supplementary pension provision financed by the employer. Voluntary non-registered supplementary pensions paid by the employer are not included in the figures of these statistics, nor voluntary pension provision paid by the individuals themselves. In addition, the statistics do not include pensions from the national pension scheme and pension from workers compensation, motor liability and military accident insurance, so-called SOLITA pensions.

The statistics contain figures on the number and median pensions of earnings-related pension recipients and new retirees on an earnings-related pension. The statistics also contain information on earnings-related pension expenditure, earnings-related pensions paid abroad and disability pension decisions.

The main classifier in the statistics is the division of the earnings-related pension scheme into the private and the public sector. In addition, the following classifications are used in the statistics: pension benefit, pension size, gender and age. Disability pensions are classified by disease category. The regional classification for the earnings-related pension expenditure is based on the Finnish regions (http://stat.fi/meta/luokitukset/maakunta/001-2015/index_en.html). Pension recipients abroad are classified by country of residence and country groups.

The country groups are defined in Appendix 2 of Earnings-related pensioners in Finland 2015, page 104 at https://www.etk.fi/en/publications/. The concepts and definitions used in the statistics are presented on the website of the statistics, at https://www.etk.fi/statistics> Pension recipients and insured > Earnings-related pension recipients.

The statistics serves social security specialists, researchers and the media, as well as others requiring information about this field. Equally comprehensive statistical data on Finnish pension recipients is not available elsewhere.

Correctness and accuracy of data

The data of this statistical publication is based on data in the pension register (composite data). The register contains registered data from pension decisions. The data is used to form pension periods and pensions which are registered in the statistics register. This statistics register forms the basis for pension statistics.

The regional data presented in the statistics is based on Kela’s population data. It is supplemented on the basis of the country of tax at source for pensions paid abroad, as reported by the pension providers.

Together with the earnings-related pension providers, the Register Services Department of the Finnish Centre for Pensions is responsible for the contents of the registers, the accessibility, scope, legality and accuracy of the data needed for the implementation of pension provision and the clarification of error conditions in the contents. The handling systems include authenticity and logical checks where the programme requires correction or verification of data. The error messages may also be comments that do not inhibit the registration of data. Arek Oy is responsible for the information technology aspects of the registers.

Arek Oy is a company jointly owned by the pension providers and the Finnish Centre for Pensions.

Flaws detected in the statistics are immediately corrected on the website. In connection with the correction, information on the content and time of the correction is provided. A correction page is added to printed publications that have not yet been distributed. If the error is substantial, a separate bulletin is issued for those who have already received the printed publication.

Timeliness and promptness of published data

The more restricted statistics Earnings-related Pension Recipients in Finland is released once a month. The more comprehensive statistics Pensioners in Finland is released once a year during the first half of the year following the statistical year.  The date of publication of the statistics is presented in the Release Calendar on the website of the Finnish Centre for Pensions at www.etk.fi/statistics, section ‘Release Calendar’.

Coherence and comparability of data

This statistical publication has been produced since 1996. Its time series are mainly comparable from that date. As for the number of earnings-related pension recipients, the time series extends back to the year 1979.

From the beginning, the statistics has covered the numbers of earnings-related pension recipients and new retirees, the mean pensions, as well as the pension expenditure of the earnings-related pension scheme. Over the years, the data content of the statistics has been extended. Data on disability pension decisions in the earnings-related pension scheme was added in 2007.

In 2005—2013, the statistics was published under the name Pensioners and Insured in Finland. As of the statistical year 2014, the data is published in two different statistical publications: Earnings-related pensioners in Finland and Persons insured for an earnings-related pension in Finland.

In 1999, the concept of new retirees was changed. It no longer included persons retiring on a part-time pension. Persons receiving a part-time pension are included in the figures for new retirees when they start to receive some other pension that is based on their own working life, usually an old-age pension. In 1996–1998, new part-time pensioners were counted as pensioners on an earnings-related pension. As of the 1999 statistics, the time series of earnings-related pension retirees have been corrected retroactively. Thus, the 1996-1998 statistics are not comparable in this respect with those of later years.

The partial old-age pension, introduced in 2017, is processed in the same way in the statistics as the part-time pension. That means that persons who have retired on a partial old-age pension in 2017 are not considered new retirees.

The following changes have been made to concepts and classifiers based on legal amendments and feedback from users:

  • Following the 2005 legal reform, pensions are no longer categorized according to how maximal they are.
  • Since 2005, disability pensions have been divided into full and partial pensions.

The statistics use applicable general standard categorizations, e.g. by disease (ICD-10) and region (province, country or residence and country group).

In cooperation with Kela, the Finnish Centre for Pensions produces Statistics on Finnish Pensioners. It covers the pensions of both the earnings-related and the national pension schemes. The figures on recipients of an earnings-related pension, new retirees on an earnings-related pension and earnings-related pension expenditure in those statistics are consistent with the figures in these statistics.

Availability and clarity of data

The statistical data is released on the homepage of the statistics and in publication Earnings-related pensioners in Finland. Some of the data in the statistics is also published in the statistical database of the Finnish Centre for Pensions, at tilastot.etk.fi.

A description of the statistics has been presented on the website of the Finnish Centre for Pensions, at www.etk.fi/statistics/earnings-related-pension-recipients/description.

The statistical service of the Finnish Centre for Pensions provides additional information about the statistics upon request per e-mail at tilastot(at)etk.fi.

Changes in earnings-related pension laws

Changes in earnings-related pension laws since 1956

1956
Entry into force of Seafarer’s Pensions Act (MEL).

1962
Entry into force of Employees’ Pensions Act (TEL) and Temporary Employees’ Pensions Act (LEL).

1964
Entry into force of Local Government Employees’ Pensions Act (KVTEL).

1967
Entry intro force of State Employees’ Pensions Act (VEL) and Evangelical-Lutheran Church Pensions Act (KiEL).

TEL and LEL and KVTEL: Survivors’ pensions added to pension benefits.

1968
Rules for the calculation of pensionable earnings revised: instead of regular income for the last and second-to-last year of employment, pensions are calculated based on earnings for the best two years of the last four years of employment.

1969
Entry into force of State Employees’ Survivors’ Pensions Act (VPEL).

1970
Entry into force of Self-employed Persons’ Pensions Act (YEL) and Farmers’ Pensions Act (MYEL).

1971
Unemployment pension added to pension benefits in private sector.

1972
Unemployment pension added to pension benefits in public sector.

1973
Disability pensions granted at less than the full amount added to pension benefits.

1974
Change-of-generation pensions added to MYEL pension benefits.

Entry into force of Farm-Closure Pension Act.

1975
Step increase in level of earnings-related pensions. Following the increase the targeted full pension level is 60 per cent of earnings or confirmed income, and the minimum pension is raised to 33 per cent.

1977
TEL index rules revised: as of 1977 the index is calculated based on the average change in general wages and prices. Pension index adjustments are carried out twice a year, in January and July.

Step increase in minimum pensions.

Unemployment pension eligibility rules eased.

Revisions made to reduced pensionable ages under KVTEL. Accrual rate for basic pension security increased beyond TEL level: full 60 per cent pension accrued in 30 years (previously 40 years).

1978
Pension providers gain the right to make one-off payments of an old-age or survivors’ pension or a vested full disability pension that before integration was less than FIM 2.50 a month (at 1966 index level) without consulting the beneficiary.

Minimum age for unemployment pension temporarily lowered from 60 to 58 years.

Entry intro force of pension scheme for municipal elected officials.

1979
Rules for the calculation of pensionable earnings revised: instead of the best two years, pensions are calculated on the middle two years of income during the last four years of employment.

1980
Minimum age for unemployment and change-of-generation pension lowered to 55 years.

1981
Coverage of YEL pension scheme extended with a legislative amendment to include partners in an incorporated business.

1982
Third phase of step increase put into effect.

Sickness allowance under the Health Insurance Act takes primacy over disability pension under the earnings-related pension scheme.

Front veterans’ early retirement pension added to pension benefits. An early front veterans’ pension could be granted to a male resident of Finland who had a front veterans’ service badge.

1983
Minimum pension increased to 38 per cent for persons whose pension contingency occurred on or after 1 Jan 1983. (For TEL and LEL, this applied to persons born before 1 Nov 1922 and for YEL and MYEL to persons born before 1 May 1930).

Women gain the right to front veterans’ early retirement pension.

1984
Pensions index adjustment performed only once a year in January.

1986
In the private sector early old-age pension and individual early retirement pension added to pension benefits.

Entry into force of Freelance Employees’ Pensions Act (TaEL) in the private sector.

Minimum age for unemployment pension restored to 60 years: no new age groups under 60 will be entitled to an unemployment pension.

1987
Part-time pension added to pension benefits in the private sector.

1988
Postipankki personnel brought under TEL insurance.

1989
Flexible pensions in the form of the early old-age pension, individual early retirement pension and part-time pension take effect in the public sector.

Retirement age system revised in the public sector. For all employment relationships commencing after 1 July 1989, retirement age is 63 years. Persons in positions with a lower retirement age and a current employment relationship on 1 July 1989 are entitled to retain their previous retirement age system.

1990
Revisions to Survivors’ Pensions Act, with male widowers and, on certain conditions, former spouses gaining eligibility to a surviving spouse’s pension. Survivors’ pension is adjusted to reflect the financial loss caused by the spouse’s death so that the surviving spouse’s own income is taken into account when calculating their pension. Distinction made between surviving spouse’s pension and orphan’s pension. The new rules are applied when the pension contingency, i.e. the deceased person’s death occurs on or after 1 July 1990.

1991
Seafarer’s Pensions Act (MEL) revised such that the Seamen’s Pension Fund is pooled into a common sharing system with the rest of the private earnings-related pension scheme.

Change-of-generation pension rules transferred from MYEL into a separate act.

Bank of Finland Security Printing House staff brought under TEL insurance.

Rehabilitation legislation updated.

1993
Entry into force of Act on Employee’s Pension Contribution.

Entry into force of Act on Farm-Closure Compensation for Farmers (LUKL) in the private sector.

Retirement age for new employment contracts in public sector set at 65 years.

1994
Minimum age for individual early retirement pension raised from 55 to 58 years for persons born after 1939.

Recipient of an individual early retirement pension may return to work without losing pension rights. Depending on the amount of earnings, the pension may be paid either to half the full amount or be suspended completely.

Minimum age for part-time pension in the private sector brought in line with the public sector and lowered from 60 to 58 years.

Rules of unemployment pension eligibility tightened.

EEA legislation takes effect in Finland.

1995
Entry into force of Act on Farmers’ Early Retirement Aid. Following a one-year transitional period the new act replaces both the Act on Farmers’ Change-of-Generation Pension and the Act on Farm-Closure Compensation for Farmers.

The option of self-correction added to the pensions appeal process. An appeal against a pension decision is first assigned to the pension provider that issued the decision. If the pension provider accepts all the appellant’s demands, it can immediately self-correct its decision. Otherwise the appeal is forwarded to the Pensions Board. Appeals to decisions made by the Pensions Board are also first assigned to the pension provider that issued the original decision, which again has the option of self-correction. If the pension provider does not correct the decision, the appeal is forwarded to the Insurance Court.

1996
Time-limited disability pension changed into a cash rehabilitation benefit designed to promote re-employment. Receipt of the cash benefit always requires a treatment or rehabilitation plan. Recipients of a cash rehabilitation benefit or other disability pension may be eligible to receive a rehabilitation increment for the duration of active rehabilitation provided by the pension provider. The increment amounts to 33 per cent of the pension currently in payment.

It becomes possible to obtain a preliminary decision about a partial disability pension in the same way as for an individual early retirement pension.

Two TEL indices are introduced in the earnings-related pension scheme, i.e. an index for persons of working age and an index for persons of retirement age. The former is based on the consumer price index and the index of wage and salary earnings, in line with the former TEL index. The latter combines the consumer price index at 80 per cent weight and the index of wage and salary earnings at 20 per cent weight.

Rules for the projected pension component revised such that future periods can only be included in pension calculations if the person has at least one year of active employment during the year of the pension contingency and the preceding 10 years.

The accrual rate for the projected component lowered for persons over 50.

Rules for the calculation of pensionable earnings revised: pensions are calculated based on income during the last 10 years in each employment relationship. As a general rule, pensionable earnings are the average index-adjusted earnings for these 10 years. However, those years (no more than one third of the total) are excluded from the calculation in which earnings were less than half the average. The revised rules will be phased in by adding one calculation year at a time until the full complement of 10 years is reached.

1997
Increment for credited periods reduced to 80 per cent of previous.

1998
All employment relationships of less than one month or below the minimum TEL earnings threshold and all work paid for by private households are insured under TaEL.

Minimum age for part-time pension lowered to 56 years until the end of 2002.

1999
Comprehensive and upper secondary school teachers brought under KVTEL. However, teachers currently covered by the state pension scheme remain under VEL through to the end of their employment.

2000
Minimum age for individual early retirement pension raised from 58 to 60 years for persons born after 1943. In the public sector the age limit may be 58 years for persons born in 1944–1946 and 59 years for persons born in 1947.

The requirement of projected pensionable service, added to the unemployment pension rules in 1994, was removed. However a pension component for projected pensionable service is no longer included in the unemployment pension, but it is only paid when the unemployment pension becomes an old-age pension or a survivors’ pension.

The reduction for early retirement on early old-age pension lowered from 0.5 to 0.4 per cent for each month that the pension is taken out early. The increment for deferred retirement on old-age pension lowered from 1 to 0.6 per cent.

2003
Entry into force of New Local Government Pensions Act (KuEL). The new act incorporates the provisions of the Local Government Employees’ Pensions Act (KVTEL) and the pension rules of the local government pensions institution Keva.

Minimum age for part-time pension restored to 58 years for persons born in 1947 and later. At the same time, the old-age pension accrual rate during part-time pension retirement is lowered.

Individual early retirement pension no longer granted to persons born after 1943. In the public sector the pension may still be granted to persons born in 1944–1947.

2004
From the beginning of 2004 pension schemes for local government, state, private sector, Evangelical-Lutheran church and Kela employees adopt the principle of the last insurer. In other words, the employee’s most recent pension provider shall issue a combined decision for all pensions under the schemes listed above and make payment of these pensions.

Changes to occupational rehabilitation that underscore the primacy of occupational rehabilitation over disability pension. The insured person is entitled to receive occupational rehabilitation with a view to preventing disability or improving their working and earnings capacity. Rehabilitation used to be a discretionary benefit. As from the beginning of 2004 applicants may appeal their pension provider’s decision on rehabilitation.

2005
Major reform to earnings-related pension acts. Pension accrues from all employment between ages 18 and 67, including employment during retirement. Furthermore, pension accrues during certain unpaid periods on social benefits. The annual accrual rate for earnings-related pension is increased to 1.9 per cent for persons aged 53–62 and to 4.5 per cent for persons aged 63–67.

Integration of earnings-related pensions discontinued.

Indexation rules for earnings-related pension scheme revised. All pensions are revalued in line with the earnings-related pension index (previously the index for persons of retirement age) regardless of the person’s age. The wage coefficient is used to revalue earnings from employment, self-employed persons’ income and the threshold values in earnings-related pension acts, as well as vested pensions. The halfway index (previously the index for persons of working age) is used to calculate pensions in cases where the pension is calculated according to rules in force before 2005.

Employee’s pension contribution increased for persons over 53.

The earnings-related pension scheme allows for flexible old-age retirement between ages 63 and 68. Eligibility to receive an increment for deferred retirement begins at age 68. The increment is reduced to 0.4 per cent.

Minimum age for early old-age pension raised from 60 to 62 years. For persons born before 1945 the minimum age remains unchanged.

Unemployment pension to be phased out. Persons born before 1950 retain the right to an unemployment pension on the same grounds as before.

The earnings-related pension reform included the introduction of a life expectancy coefficient from the beginning of 2010. The coefficient is a way for the pension scheme to prepare for the continuing rise in life expectancy.

Entry into force of the Act on Pension Assistance for Long-Term Unemployed Persons: persons meeting the criteria for assistance are awarded an old-age pension without any reduction for early retirement from age 62.

2007
Entry into force of the new Employees Pensions Act (TyEL) in the private sector, combining into one the previous employees pension acts TEL, LEL and TaEL.

2008
Keva and other public sector pension institutions become involved in the Finnish Centre for Pensions and its administration. Provisions regarding Keva’s contribution to the costs of running the Finnish Centre for Pensions are added to the Local Government Pensions Act.

2010
A temporary act passed for the period from 1 January 2010 to 31 December 2013 to facilitate returning to work from disability pension. Disability pension recipients are allowed to earn at least EUR 600 month in addition to their pension. Furthermore, the pension may be left dormant for the duration of employment.

Minimum age for part-time pension raised to 60 years. At the same time, changes to pension accrual rules during part-time retirement mean that pension is accrued only for gainful employment, no longer for the share of part-time pension. These changes only apply to persons born in 1953 or later.

The accrual rate for the projected component of disability pension raised for service between ages 50 and 63.

A lump-sum increase is made for the first time to the pensions of persons disabled before age 51. The one-time-only increase is paid out to those who have received a pension without interruption for five years or more. The younger the retiree at the onset of disability pension, the bigger the increase.

The life expectancy coefficient affected pensions for the first time. The coefficient decreases the amount of new statutory earnings-related pensions.

2012
A long-term unemployed person born in the 1950s and over 62 may, on certain conditions, receive an old-age pension without reduction for early retirement.

2013
The option of early old-age retirement removed from the earnings-related pension system for persons born in 1952 or later.

Minimum age for part-time pension increased to 61 years for persons born in 1954 or later.

2014
Act promoting the return to work of persons on disability pension extended until the end of 2016.

2015
Legislative amendment concerning rehabilitation, with pension providers required to assess and determine the disability pension applicant’s right to occupational rehabilitation.

2016
New Seafarer’s Pensions Act (MEL) brings pension accrual rates and earnings-related pension contributions in line with other earnings-related pension acts.

2017
Earnings-related pension reform, with key changes affecting minimum ages and accrual rates for old-age pension.

Minimum age for old-age pension raised progressively from 63 to 65 years. Persons born in 1955 are the first age group whose minimum age of eligibility is increased. Persons born in 1962 are the first age group whose retirement age is 65. From persons born in 1965 and later, the minimum age for old-age retirement is linked to life expectancy.

Persons who defer their old-age pension beyond the earliest age of eligibility receive an increment for late retirement.

Pension accrual starts at age 17 (instead of 18 years).

As of 2017 the pension accrual rate is 1.5 per cent of annual earnings. The employee’s earnings-related pension contributions are no longer deducted from annual earnings after 2016. Persons aged 53–62 constitute an exception, however: their pension accrual rate is 1.7 per cent through to 31 Dec 2025. Persons entitled to this increased accrual rate for the transitional period also pay a 1.5 percentage point higher earnings-related pension contribution for the corresponding period.

Part-time pension replaced by partial early old-age pension. The pension is available to persons born in 1949 or later who have reached the minimum age limit, which is determined based on year of birth. Eligible persons may not at the start of the pension receive any other pension based on their work history or early retirement aid. The amount of partial old-age pension is 25 or 50 per cent of the earnings-related pension accrued at the time of retirement, based on the individual’s own choice. An early retirement reduction is made to the pension if it is taken out before the age threshold for old-age pension in the age group concerned. There are no rules regarding employment.

A disability pension can also be granted in the form of a years-of-service pension if the pension applicant has been engaged in work involving high levels of physical and mental strain for at least 38 years. Eligibility also requires disability, although the criteria are less rigorous than in the case of regular disability pension.

Entry into force of the Public Sector Pensions Act (JuEL), combining the Local Government Pensions Act (KuEL), the State Employees’ Pensions Act (VaEL) and the Evangelical-Lutheran Church Pensions Act (KieL). The act also applies to Kela staff.

2018
The first years-of-service pensions were paid out.

 

OUR EXPERTS IN THIS AREA: HEIDI NYMAN, JARI KANNISTO