Money flows of earnings-related pensions

In addition to pension contributions paid by employers, employees and the self-employed, earnings-related pensions are financed through payments into the earnings-related pension scheme by the Unemployment Insurance Fund, the State, earnings-related pension assets and their return.

Employers disburse pension contributions based on the earnings of their employees to their own pension providers. The pension providers use them, on the one hand, to pay out current earnings-related pensions that they are responsible for and, on the other hand, to prepare for the payment of future pensions by funding part of the payments. The self-employed and farmers pay their own pension contributions straight to the pension provider.

The Unemployment Insurance Fund compensates the pension providers for costs arising from employees’ unemployment and training allowances and pension accrual based on alternation leave. The pension providers share the costs arising from accrued pension rights during unsalaried periods. In addition, the State reimburses the pension providers for benefits paid during periods of study and periods of child-care.

The following visualisation of the earnings-related pension money flows illustrates the assets of the earnings-related pension system and their flows in given years. The user can select the desired year and examine how the earnings-related assets flowed in that year. Click the image below to access the visualisation.

Earnings related pension money flows 2017

In addition to paying earnings-related pensions, pension contributions collected are funded and used to pay the administrative and business costs of the pension providers. The costs arising from pension provider operations include wages, commissions and statutory personnel add-ons. Costs arising from investment operations are not included in the operating costs.

Earnings-related pension providers have invested their pension assets mainly in shares, bonds and real estate, both in Finland and abroad. More detailed information on the investment operations of statutory pension assets is available on, for example, the website of the Finnish Pension Alliance TELA.

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