Pension rights to one million for degree studies

Graduates this spring have taken the total number of people who have accrued pension rights for degree studies in Finland to more than one million. Pension has been accrued for studies leading to a degree since 2005. However the greatest benefit in terms of building up the pension pot comes through job opportunities.

Pension rights have been accrued for degree studies in Finland since 2005. The idea behind the reform was to encourage students to complete their studies and to highlight the importance of education as an integral part of Nordic welfare.

By year-end 2017, pension rights had been accrued on a total of 975,000 completed degrees. When this spring’s graduates are added to this total, the figure exceeds one million.

Just over half of the beneficiaries had completed some form of tertiary degree. In 2017 two-thirds (68%) of all graduates were aged under 30, and just under half were women.

“Each year some one hundred thousand students complete a degree for which they accrue pension rights. Studies are only counted as pensionable time if you complete a degree, so there’s another incentive to study to completion,” says Jari Kannisto, Development Manager at the Finnish Centre for Pensions.

Pension is accrued for basic degrees completed at vocational schools, universities of applied sciences, and universities. Pension rights also accrue for degrees completed abroad, provided that these studies are eligible for Kela study allowance.

Tertiary degree brings monthly pension of over 50 euros

Earnings-related pension accrual for degree studies is based on imputed monthly earnings of 728 euros (2018). The period of pension accrual is limited to five years, even if the individual completes more than one degree.

For example, a higher university degree adds 55 euros to the individual’s monthly pension pot, the same as one year of employment in a medium-paid job. The pension is paid monthly from the beginning of earnings-related retirement to the end of life. Pensions accrued for degree studies are paid by the state.

“It’s good to remember, though, that the greatest benefit from studying comes with time, over the years spent at work. A degree will always improve your labour market position and salary, which is the basis for your pension,” Kannisto says.

Pension accrues during parental leave

Pension is also accrued from many periods for which social benefits are paid, including parental leave, home care allowance and earnings-related unemployment benefits.

In 2017 almost one million persons earned pension rights for unpaid periods, primarily on grounds of unemployment and child care. The amount of pension benefits recorded for women was slightly higher than for men.

 

 

Facts

Earnings-related pension accrues

  • for degrees completed at vocational schools, universities of applied sciences, and universities;
  • for degrees completed at foreign universities if the studies are eligible for Kela study allowance;
  • on imputed monthly earnings of 728 euros (2018);
  • for a maximum of five years, even if the individual completes more than one degree; and
  • automatically: it is not necessary to file an application for a degree pension. Eligibility requires minimum lifetime earnings of 17,480 euros (2018). The degree will show up in each person’s pension record, which should be checked at regular intervals.
Degree from Period of pension accrual Approximate amount of pension
Higher university 5 years €55/month
University of applied sciences 4 years €44/month
Lower university 3 years €33/month
Basic vocational degree 3 years €33/month
Example: A higher university degree adds 55 euros to the individual’s monthly pension, regardless of the number of degrees completed. The number of years spent studying is irrelevant.

More information:
Jari Kannisto, Development Manager, +358 29 411 2232, jari.kannisto(at)etk.fi

Tiina Palotie-Heino, Statistics Manager, +358 29 411 2147, tiina.palotie-heino(at)etk.fi

Photo: iStock