Partial old-age pension continues to be popular

The Finnish Centre for Pensions projects that 10,000 new partial old-age pensions will be paid out in 2018. In practice, every tenth person who has turned 61 years will take out this pension early. The majority of those who have drawn the pension are middle-income men who continue working while drawing half of their earned pension.

The partial old-age pension was introduced more than a year and a half ago. In its first year, 12,500 persons took out a partial old-age pension.

By the end of July this year, another 6,400 persons had taken out this pension benefit. According to estimates by the Finnish Centre for Pensions, that number will grow to 10,000 by the end of the year.

Although the number of new retirees on a partial old-age pension does not quite reach up to last year’s levels, the pension benefit continues to be popular. In its first year, it was an option for all persons aged at least 61. Now the situation has normalised: each year one age group reaches the qualifying age.

“Those who are turning 61 years are just as eager to apply for this pension benefit this year as last year. If the pace continues along the same lines throughout the year, every tenth of them will apply for a partial old-age pension,” says development manager Jari Kannisto (Finnish Centre for Pensions).

Most applicants are middle-income men

Two out of three partial old-age pension recipients are men.

Nearly 90 per cent of all partial old-age pension recipients take out half of their earned pension. Their average partial old-age pension is 800 euros per month (880 euros for men and 670 euros for women). The median pension is 720 euros per month.

At the end of 2017, more than two out of tree (70%) partial-old age pension recipients were working. Roughly 18 per cent were unemployed while the rest were outside the labour force.

“Most of them earned mid-sized wages. It seems that the older the person taking out the partial old-age pension is, the higher are their income and pension, “ Kannisto explains.

One fifth of the retirees on this new pension benefit are self-employed persons, three out of four work or have most recently worked in the private sector.

100 euro reduction for early retirement

The partial old-age pension permanently reduces the full old-age pension. Based on how popular the benefit continues to be, people don’t seem to find the reduction for early retirement to be a major issue.

The average reduction for early retirement of those who have taken out 50% of their pension is 84 euros per month. This year, persons born in 1957 will become eligible for the pension. If they take out the pension at age 61, they will retire almost three years early. Their average deduction for early retirement will be 110 euros per month.

By working beyond one’s retirement age, it is possible to compensate for this deduction.

“Those who take a partial old-age pension get a tax benefit. If you reduce your working hours and replace your loss of earning with pension income, your total tax rate will be reduced. At the same time, you may be able to work longer,” Kannisto sums up.

Less than ten retirees on a years-of-service pension

In addition to the partial old-age pension, the 2017 pension reform introduced the years-of-service pension for persons who have done work that requires great mental or physical effort.

The first years-of-service pensions were paid out in the spring of 2018. By the end of July, 17 persons had been granted the pension. Seven of them had taken it out. They were all men, and their average pension was approximately 1,900 euros per month.

Partial old-age pension

  • replaced the part-time pension in the 2017 pension reform,
  • offers the possibility for at least 61-year-olds to take out a quarter (25%) or half (50%) of the pension they have earned so far,
  • is adjusted with both the life expectancy coefficient and a 0.4 per cent monthly deduction when taken early/increase when taken late
  • reduces/increases the pension amount permanently,
  • has no restrictions as to how much a person can work or earn,
  • can be paid to people who are unemployed or working, and
  • can be taken out even if one postpones retirement on a full pension. In that case, the part of the pension that isn’t taken out is increased by 0.4 per cent for each month that full old-age pension is postponed.

Years-of-service pension

  • can be granted to 63-year-olds born in 1955 or later,
  • requires a 38-year-long working history of  work that requires great mental or physical effort,
  • requires a medical statement of a reduced work ability,
  • amounts to the pension accrued up to the time that the pension is taken out, and
  • can be paid only until the recipients reache their retirement age.

More on the partial old-age pension

More information
Jari Kannisto, Development Manager, phone +358 29 411 2232, jari.kannisto(at)
Tiina Palotie-Heino, Statistics Manager, phone +29 411 2147, tiina.palotie-heino(at)

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