Administration and Supervision of the Pension Scheme
A significant special feature of Finnish social security and the Finnish insurance market is that private insurance providers handle private-sector earnings-related pension insurance and workers’ compensation, which are part of statutory social insurance.
Tripartite development of an administratively decentralised system
The administration of the earnings-related pension system is decentralised to several earnings-related pension providers. In the private sector, statutory earnings-related pension insurance is handled by pension insurance companies, special pension insurance providers, company pension funds and industry-wide pension funds, as well as public-sector pension providers.
Due to the decentralised administration, certain functions are handled centrally at the liaison body of the earnings-related pension scheme, the Finnish Centre for Pensions.
The earnings-related pension scheme has a tripartite negotiation system. Although the content of the pension provision is regulated by statute, the development work is done largely by the state and the labour market organisations. Hence, the State, employers, employees and the self-employed influence any legislative changes.
The earnings-related pension provision is supervised by ministries
As for private-sector earnings-related pension insurance companies and the special pension providers of farmers and seafarers, the supervision of the earnings-related pension scheme is handled by the Ministry of Social Affairs and Health and the Financial Supervisory Authority.
Keva is under the supervision of the Ministry of Finance and, as for the implementation of the state pension provision, the national Audit Office of Finland. The State Treasury operates under the Ministry of Finance and is supervised by the National Audit Office of Finland.
The pension fund of the Evangelical-Lutheran Church is supervised by the Church Council under the auspices of the Ministry of Education and Culture and the general synod. The administration and operations of the Social Insurance Institution are supervised by the Trustees appointed by Parliament.
The rights of the insured are secured in the pension scheme
Earnings-related pension benefits accrue based on earnings and an accrual rate linked to age. The Finnish Centre for Pensions supervises that employers take out pension insurance for their employees and that the self-employed insure themselves. The earnings-related pension insurance companies also supervise their employer-customers. The insured person is responsible for checking that his or her private-sector employments are listed on the pension record.
The pension accrual is secured through the defined benefit scheme, index adjustments and the fact that the earnings-related pension providers are jointly and severally liable for meeting their pension commitments. Furthermore, the earnings-related pension is an earned benefit, which means that it is subject to the constitutional protection of property. In general, an earnings-related pension decision can be appealed to the Pension Appeals Court.