The Life Expectancy Coefficient is Calculated at the Finnish Centre for Pensions

The Finnish Centre for Pensions calculates the value of the life expectancy coefficient annually. It is defined so that the capital value of the pension adjusted with the coefficient is the same as the unadjusted capital value of the pension in the base year 2009.

The Finnish Centre for Pensions calculates the capital value (the longevity indicator) by using the two-percent interest rate stipulated in the law as well as the mortality risk figures of Statistics Finland’s mortality statistics available for the last five years. In other words, in the calculation of the longevity indicator for the base year 2009, the mortality risk figures of the mortality statistics for 2003-2007 are used.

As of 2009, the longevity indicator either decreases or increases, depending on the evolution of mortality. When longevity increases, the longevity indicator increases. Correspondingly, the longevity indicator is reduced when longevity decreases.

The life expectancy coefficient is calculated by comparing the longevity indicator of the year under review with the longevity indicator of the base year 2009. When the longevity indicator increases, the life expectancy coefficient is reduced compared to the coefficient for the previous year. Since the amount of the earned pension is multiplied with the life expectancy coefficient, the amount of the monthly pension is also reduced.

The life expectancy coefficient is confirmed separately for each birth-year group for the year in which the group in question reaches the age of 62. The first life expectancy coefficient was confirmed for the base year 2009, when people born in 1947 turned 62 years. Its value was 1.00000.

The life expectancy coefficient is calculated at a precision of five decimals. The value of the coefficient is the same for men and women.

The first life expectancy coefficient that deviated from the baseline value was issued in November 2009 for 2010. The first age group to be affected by the life expectancy coefficient is that born in 1948.

The Ministry of Social Affairs and Health will confirm annually the value of the life expectancy coefficient for the following year no later than by the end of November.

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