Confirmed life expectancy set to cut new pensions for those born in 1964 by 5.4 per cent in 2026
The Ministry for Social Affair and Health in Finland has confirmed the life expectancy coefficient for 2026. The coefficient will cut starting pensions by nearly 5.4 per cent – more than in 2024. The pension amount is multiplied by the life expectancy coefficient at the start of retirement, that is, when the pension is granted.
According to the ministry’s decree, the life expectancy coefficient confirmed for 2026 is 0.94643.
As a result, old-age pensions and certain other pensions for those born in 1964 that start in 2026 will be reduced by 5.4 per cent.
“After two years of increase, the coefficient is now declining again because life expectancy has grown. The declining coefficient in 2026 means that new pensions are being reduced more than in 2024. The coefficient is returning below the 2024 level, when its exceptional rise began”, explains Timopekka Hakola, economist at the Finnish Centre for Pensions.
The life expectancy coefficient is applied when the pension begins, that is at the point the pension provider calculates how much the pension will amount to when one retires.
The projected earnings-related pension, as shown on the pension record, has been reduced by the estimated life expectancy coefficient.
What is the life expectancy coefficient?
The life expectancy coefficient is a mechanism introduced in the 2005 pension reform, designed to adjust the amount of monthly pension in line with general trends in life expectancy. Its purpose is to curb the increase in pension costs resulting from people living longer and to encourage later retirement.
“In essense, the coefficient takes into account how long people are expected to live on average. The longer the average lifespan, the lower the monthly pension, as the pension is paid out over a longer period. When a pension earned during one’s working life is paid out, the amount of the pension is multiplied by the life expectancy coefficient. The coefficient has a permanent impact on the amount of the pension”, Hakola explains.
Life expectancy calculated for the 62-year-olds
The life expectancy coefficient is determined separately for each year of birth at the point when the cohort turns 62. Once confirmed, the coefficient remains unchanged. It is applied to all pensions governed by the earnings-related pension acts when the pension begin. In recent years, the life expectancy coefficient has reduced starting pensions by more than 5 per cent.
Life expectancy coefficients confirmed for different birth cohorts, 2020–2026
| Life expectancy coefficient determined (at age 62) in year | Year of birth | Life expectancy coefficient | Starting monthly pension reduced by (%) |
| 2026 | 1964 | 0.94643 | -5.4 |
| 2025 | 1963 | 0.94759 | -5.2 |
| 2024 | 1962 | 0.94692 | -5.3 |
| 2023 | 1961 | 0.94419 | -5.6 |
| 2022 | 1960 | 0.94659 | -5.3 |
| 2021 | 1959 | 0.94984 | -5.0 |
| 2020 | 1958 | 0.95404 | -4.6 |
The life expectancy coefficient was first calculate for the year 2009, at which point its value was set at one (1.00000). At that time, individuals born in 1947 turned 62 years.
The Finnish Centre for Pensions calculates the coefficient annually, after which it is confirmed by the Ministry of Social Affairs and Health through a government decree.
The life expectancy coefficient is based on the observed mortality trends among those of retirement age.
The method for calculating the coefficient will change in 2027
From 2027 onward, the way the life expectancy coefficient is determined will be altered, as the minimum retirement age will be linked to life expectancy.
The capital value of a pension adjusted with the life expectancy coefficient and calculated at the retirement age will be equivalent to the capital value of a pension adjusted by the life coefficient confirmed for 2026 calculated at age 65.
“In practice, this change in calculation ensures that the effect of changes in life expectancy is not taken into account twice – both in setting the retirement age and in the life expectancy coefficient itself.”
Example of how the life expectancy coefficient affects your pension
You were born in 1964. By the time you reach your retirement age, you have accrued an earnings-related pension of €2,000. The life expectancy coefficient confirmed for those born in 1964 is 0.94643. Your accrued pension is multiplied by this coefficient:
€2,000 x 0.94643 = €1,892.86
Your pension before tax is €1,892.86.
This means that the life expectancy coefficient reduces your pension by around 5.4 per cent.
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