Parties to the pension scheme
The Ministry of Social Affairs and Health is in charge of drafting the earnings-related pension laws. The Financial Supervisory Authority supervises private sector earnings-related pension providers and the special providers for farmers and sailors.
Keva, the public sector pension provider, is governed by the Ministry of Finances. The Financial Supervisory Authority supervises the financial planning and investments of Keva. As far as the implementation of State pensions, Keva is supervised by the National Audit Office of Finland (NAOF) and the Audic Committee of the Finnish Parliament.
The administration of the earnings-related pension system is decentralised to several authorised 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 by public sector pension providers.
Because of the decentralised administration, certain functions are handled centrally by a statutory co-operation body, the Finnish Centre for Pensions. Together with the authorised pension providers, the Finnish Centre for Pensions participates in the preparation of instructions and laws.
The authorised pension providers are responsible for awarding and paying out earnings-related pensions. They also advice the insured in pension matters. Employers and the self-employed pay their earnings-related pension contributions to the authorised pension providers.
The Social Insurance Institution of Finland (Kela) administers the national pension scheme and other social security. National pensions are financed with public funds.
(TyEL = Employees Pensions Act / YEL = Self-employed Persons’ Pensions Act / MYEL = Farmers’ Pensions Act / MEL = Seafarer’s Pensions Act / JuEL = Public Sector Pensions Act)
Last provider pays out the earnings-related pension
Although the earnings-related pension scheme is decentralised to several parties, one pension application is enough. The application may be handed in or sent to any authorised pension provider, local Kela office or the Finnish Centre for Pensions.
According to the so-called principle of the last institution, the pension provider where an individual’s last employment contract or self-employment was insured grants and pays out the pension.
The last institution calculates the total amount of the pension that has accrued from different employments, handles the payment of the pension to the pension recipient and levies the pension shares of the other pension providers via the cost clearing handled by the Finnish Centre for Pensions.
Authorised pension providers handle private-sector pensions
In Finland, the authorised pension providers, special pension providers, company pension funds and industry-wide pension funds are responsible for the implementation of private sector statutory earnings-related pensions (under the Employees Pensions Act and the Self-employed Persons’ Pensions Act).
The Farmers’ Social Insurance Institution and the Seafarer’s Pension Fund handle the earnings-related pensions in their own fields. These institutions operate based on separate statutes: the Farmers’ Pensions Act and the Seafarer’s Pensions Act.
Keva implements public-sector earnings-related pensions
The pensions of public-sector employees are regulated in the Public Sector Pensions Act. In 2017, the Local Government Pensions Act, the State Employees’ Pensions Act, the Evangelical Lutheran Church Pensions Act and the regulations concerning the employees of Kela merged into this one public sector pension act. The employees of the Orthodox Church, the Bank of Finland and the regional government of Åland have their own pension regulations.
Keva implements the earnings-related pensions for employees in the municipal sector, the State, the Evangelical Lutheran Church and Kela. Keva is also responsible for the financing of local government pensions. The State Pension Fund of Finland is responsible for the financing of state pensions.
The Central Church Fund is responsible for the pensions of the employees of the Evangelical-Lutheran Church, but Keva implements these pensions. The Central Church Fund handles issues relating to the financing of pensions.
Depending on their position and the date on which their employment begun, the employees of the Orthodox Church are insured under the State Employees’ Pensions Act, the Employees Pensions Act or the Orthodox Church Act. Depending on which act is applied, the pensions are implemented by an earnings-related pension provider, Keva or the Central Church Fund of the Orthodox Church.
The pensions of Åland regional government employees hired before 1 January 2008 are arranged according to the Åland regional government’s own pension regulation. The Finance Department of the regional government of Åland implement these pensions.
Mandatum Life Insurance Company Limited handles the pensions of the employees of the Bank of Finland.