Pension reform in 2017 brings downturn in number of new old-age retirees
In 2018 earnings-related pension expenditure amounted to 27.9 billion euros, up 800 million from the year before. The number of new old-age retirees fell back to 49,000, representing a decrease of almost 8,000 or eight per cent from 2017. The main reason was the pension reform that was put into effect in 2017.
In 2018 a total of 69,000 persons retired on an earnings-related pension, 49,000 of whom were new retirees on an old-age pension. The numbers retiring on an old-age pension dropped appreciably by 8,000 or eight per cent from 2017.
The decrease seen in the number of people moving into retirement was entirely expected as the 2017 pension reform is set to progressively increase retirement age. What is more, most baby boomers have by now retired. The 2017 pension reform saw the introduction of two new pension benefits, i.e. the partial old-age pension and the years-of-service pension.
“The pension reform is working the way it was intended to work. The average age at old-age retirement is rising, which without question is a positive trend,” says Tiina Palotie-Heino, Statistics Manager at the Finnish Centre for Pensions.
In 2018 the number of people retiring on a disability pension was 19,900, marking an increase of almost 1,300 compared to 2017.
At year-end 2018 a total of 1.5 million persons received an earnings-related pension. This figure was up 15,700 from the previous year.
Earnings-related pension expenditure rises three per cent
In 2018 earnings-related pension expenditure came to 27.9 billion euros, up 0.8 billion from 2017. This increase in pension expenditure was driven by the rising number of earnings-related pension recipients, indexations and the higher level of starting old-age pensions.
“However the growth of earnings-related pension expenditure was more moderate than in 2017 due to the declining number of new retirees on an old-age pension,” Palotie-Heino points out.
Old-age pensions accounted for 24.2 billion euros of total earnings-related pension expenditure. Expenditure on disability pensions came to 1.8 billion euros and expenditure on survivors’ pensions to 1.7 billion euros.
Men’s pensions one-quarter higher than women’s
In 2018 the average monthly pension of new old-age retirees was 1,775 euros; for men the average was 2,051 euros and for women 1,523 euros.
“Men’s years-of-service pensions averaged at roughly the same level as new old-age pensions. This is explained by the fact that years-of-service pensions are awarded to people who have worked long careers in burdensome jobs and occupations,” Palotie-Heino continues.
All pension figures reported here are gross values. The data are based on the Finnish Centre for Pensions pension register.