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Municipal sector employees retire on a partial disability pension three times more often than private sector employees. Research shows that the partial disability pension is also more frequently taken out by women.

Senior researcher Anu Polvinen (Finnish Centre for Pensions) observed in her study that the gap between retirement on a disability pension is large between the private and the municipal sector.    

A partial disability pension is a frequent benefit among municipal sector employees. They retire on a partial disability pension three times more often than private sector employees.  

The partial disability incidence rate among private sector employees insured under the Employees Pensions Act is 0.16 per cent. The equivalent rate among municipal sector employees insured under the Local Government Pensions Act is 0.51 per cent”, says Polvinen. 

The full disability pension incidence rate is nearly equal for both sectors: 0.48 and 0.51 per cent. 

Around 20,000 persons retire on a disability pension each year.  

Age, gender and size of employer matters 

The gap in the disabiilty incidence rates between the sectors is partly due to individual-level factors such as age and gender.  

“On average, municipal sector employees are older and more educated and have a slightly longer working life than private sector wage earners. In addition, more women work in the municipal sector,” Polvinen states. 

The size of the employer also matters in this respect. It is easier to rearrange work tasks in larger companies than in smaller ones. 

“The larger the private sector employer is, the more likely employees are to retire on a partial disability pension. The size of the employer also seems to have an impact on the differences between the sectors since municipal employers are mainly large employers,” Polvinen explains.  

Every fifth wage earner is a municipal sector employee 

Approximately every fifth wage earner in Finland works in the municipal sector. The most frequent municipal sector professions include nursing and health care employees and experts as well as teachers. The most common private sector professions, on the other hand, include senior experts, experts and service and sales employees. 

The research data of Polvinen’s study include the register data of the Finnish Centre for Pensions, supplemented with data from Statistics Finland and the Digital and Population Data Services Agency. The study focuses on 30–62-year-old persons in 2013 who were insured for an earnings-related pension either under the Local Government Pensions Act or the Employees Pensions Act and who had not retired. 

Photo: Gettyimages

Finnish Centre for Pensions – Central body of and expert on statutory earnings-related pensions