Money Flows Connected to Earnings-related Pensions
In addition to pension contributions charged from employers, employees and the self-employed, earnings-related pensions are also financed through payments into the earnings-related pension scheme from unemployment insurance contributions, state shares and earnings-related pension assets as well as investment profits from said assets.
Employers disburse pension contributions based on the earnings of their employees to their own pension providers, who use them to finance earnings-related pensions currently on their responsibility and, on the other hand, prepare for the payment of future pensions by funding payments. The self-employed and farming entrepreneurs pay their own pension contributions directly to the pension provider.
The Employment Fund compensates the pension providers for costs arising from employees’ unemployment and training allowances and pension accrual based on alternation leave. All pension providers participate in the costs arising from accrued pension shares from unsalaried periods of allowance. Additionally, the State reimburses the pension providers for benefits paid during periods of study and periods of child-care.
This 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.
In addition to paying earnings-related pensions, pension contributions collected are funded and used to pay the maintenance and business costs of the pension providers. Such costs include, for example, costs arising from pension provider operations such as wages, commissions and additional personnel expenses. Costs arising from the investment operations of a pension provider are not included in the operating costs.
Earnings-related pension providers have mainly invested their pension assets in shares, bonds and real estate, both domestic and foreign. More detailed information on the investment operations of statutory pension assets is available on, for example, the website of the Finnish Pension Alliance TELA.