According to the statistics of the Finnish Centre for Pensions, people in Finland retired on an old-age pension in 2016 at age 61.1 years on average. The effective retirement age was the same as in 2015. The number of new retirees rose to 76,000 persons, of whom 75% retired on an old-age pension.
The other year, the long upward trend of the effective retirement age came to an end. Last year, as expected, the effective retirement age remained unchanged. The changes to the laws in connection with the 2005 pension reform no longer raise the effective retirement age. At the same time, the long recession has increased people’s desire to retire since work opportunities have been reduced.
In addition to the reform, retirement has been postponed because the health and working ability of the working-age population has improved. The number of persons on a disability pension has dropped by 25% since 2008. This development seems to have halted, at least for now.
In the last few years, the number of people retiring on a disability pension has stabilised at slightly below 19,000 persons.
“Although the number of new retirees on a disability pension has not been reduced any more, the nature of disability is changing. The number of new full disability retirees continues to go down. At the same time, the share of the partially disabled grows,” explains Jari Kannisto, Development Manager at the Finnish Centre for Pensions.
An increasing number of people retire at age 63. In 2016, nearly 40 per cent of all new retirees did so. The earliest possible retirement age for an old-age pension has been the most popular retirement age for a long time.
“That the effective retirement age has not changed in recent years is quite as expected. The brighter labour markets and the new retirement ages that came into force at the beginning of the year will contribute to later retirement,” explains Mikko Kautto, Director at the Finnish Centre for Pensions.
In 2016, the expected effective retirement age for 25-year-olds was 61.1 years and for 50-year-olds 62.8 years. The expected effective retirement age depicts the average retirement age if the retirement and mortality rates remain on the level of the statistical year.
Earnings-related pensions paid to 76,000 new retirees
In 2016, approximately 76,000 persons retired on an earnings-related pension. This is slightly more than in 2015, and the second highest record in statistical history. Three out of four, or a total of 57,000 persons, retired on an old-age pension. This is more than ever before.
The proportion of persons retiring on an old-age pension has grown pronouncedly in the last few years.
“The underlying reason must be that the early retirement routes such as the unemployment pension have been abolished. In 2008, for example, only half of the new retirees retired on an old-age pension,” says Kannisto.
Roughly 5,000 persons retired on a part-time pension. This is one third more than in 2015. Most likely, the reason behind this increase is that the part-time pension was abolished as of the beginning of 2017.
Mikko Kautto, Director, phone +358 29 411 2185, +358 40 740 8095, mikko.kautto(at)etk.fi
Jari Kannisto, Development Manager, phone +358 29 411 2232, +358 50 368 7559, jari.kannisto(at)etk.fi
Three facts about retirement on an earnings-related pension:
- The average effective retirement age in 2016 was 61.1 years.
- In 2016, approximately 76,000 persons retired on an earnings-related pension.
- Circa 1.4 million people receive a pension based on their own working life.
The expected effective retirement age
- depicts the average effective retirement age if the retirement and mortality rates remain on the level of the statistical year;
- is independent of the demographic age structure and is calculated under the same principles as the expected life expectancy that measures life span; and
- measures the development of the effective retirement age of the 25- and the 50-year-olds.
Reaching the goals at an even pace would require:
- an annual increase of slightly less than 0.2 per cent from the level in 2008
- an annual increase of an ample 0.1 per cent from the level in 2016.
The effective retirement age has risen particularly because the disability pension has been abolished and the number of new disability retirees has decreased.