Actuarial Principles and Insurance Terms and Conditions

The actuarial principles define, among other things, how the earnings-related pension providers are to calculate the insurance contribution, the technical provision and the pension liability. In addition, the actuarial principles define the common calculated interest rate, i.e. the return requirement. The earnings-related pension insurance companies, the industry-wide and company pension funds, as well as the specialised pension providers have their own actuarial principles.

The insurance terms and conditions are applied to the insurance contract signed between the employer and the earnings-related pension insurance company. The insurance terms and conditions include regulations on how to define the persons covered by the insurance, details concerning the validity period and the termination of the insurance, the payment of insurance contributions to the insurer and consequences in case of neglect of payment.  The insurance terms and conditions also regulate the reborrowing of insurance contributions.

Preparing the actuarial principles and the insurance terms and conditions

The actuarial principles of the earnings-related pension insurance companies are prepared by representatives from the earnings-related pension insurance companies, the Finnish Centre for Pensions and the Ministry of Social Affairs and Health.

The actuarial principles of the industry-wide and company pension funds are prepared by the industry-wide and company pension fund work group. The group is chaired by a representative from the Ministry of Social Affairs and Health, and its members are actuaries from the Finnish Centre for Pensions and the service offices of the pension providers.

The principles for calculating the insurance contributions and technical provisions have to be drawn up keeping in mind especially the safeguarding of the interests of the insured, i.e. secure the pension company’s ability to handle its future pension payments (principle of solidity). When drawing up other principles, attention should be paid especially to achieving reasonable principles (principle of moderation).

The pension providers have to cooperate in the preparation of the insurance terms and conditions and the actuarial principles. The principles may not contain differences between the pension providers which would hamper the handling of common matters in accordance with the earnings-related pension acts.

Confirmation of actuarial principles and insurance terms and conditions

The Ministry of Social Affairs and Health confirms the private-sector pension insurance terms and conditions and actuarial principles (including those of the Farmer’s Social Insurance Institution).

The contribution principles of the employees that are covered by the State Employees’ Pensions Act are confirmed by a Council of State decree. The Ministry of Finance confirms the administrative expenses relating to the pension contribution. Keva’s Board of Directors issues the contribution principles for employees that are covered by the Local Government Pensions Act.