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The average disposable income of pensioners in 2020 was 27,000 euros. Pensioners’ income level relative to the employed population is 77 per cent. The ratio has remained virtually the same over the last decades. Single, particularly under-55-year-olds, have a smaller-than-average income.

An extensive study by the Finnish Centre for Pensions reviews the economic wellbeing of pensioners from 1995 to 2020 via, for example, pensions, income, wealth and perceived economic welfare.  

The most well-off pensioners are the 55–74-year-olds who live in a two-person household. Single, particularly under-55-year-olds, have a clearly smaller-than-average income. 

“Measured in different ways, the economic wellbeing of pensioners is, on average, relatively good. As in other population groups, there are those who are better off and those who are less well off. Also, compared to other EU countries, Finnish pensioners are slightly better off than average”, says Head of Research Susan Kuivalainen (Finnish Centre for Pensions). 

In 2020, the poverty rate of pensioners was 13 per cent, that is, nearly the same as of the total population on average.According to EU’s definition, low-income people are those whose monetary income is under 60 per cent of the median income of the total population.

Pensioners’ poverty rates in various population groups in 2020, when the poverty limit is 60 per cent of the total population’s median income. Of both the total population and pensioners, 13 per cent are below the poverty line. Of retired men, 11 per cent are below the poverty line, while the same share of women is 15 per cent. Of 18–54-year-olds, 27 per cent were below the poverty line. The same is true for 13 per cent of 55–64-year-olds, 10 per cent of 65–74-year-olds, 13 per cent of 75–84-year-olds and 24 per cent of persons aged 85 or over. Of single pensioners, 30 per cent are below the poverty line, and of those living in at least a two-person household, three per cent are poor.

Income level fairly stable in retirement 

The income level of persons who have retired largely reflects the financial status before retirement. However, at retirement, the income gaps even out slightly. For example, the economic wellbeing of those retiring from work decreases somewhat, while the economic wellbeing of those who retire from outside the labour force increases somewhat. In retirement, the income level remains fairly stable.

“Central goals of pension policy are to retain a reasonable pre-retirement consumption level and to prevent poverty.For the main part, the aims are reached when we examine the status of retireesboth in euros and in comparison to other population groups”, says economist Juha Rantala (Finnish Centre for Pensions).   

Wealth and family relations affect income 

Pensioners’ most important source of income is their earnings-related pension that is based on work. In 2020, the average share of earnings-related pensions of the gross income of pensioners was around 60 per cent, and of the national pension, around five per cent.   

“Pensioners’ income is a whole which consists of earnings from work and capital, and in which family plays a great role. For the low-income, the national pension and other minimum security received in one’s own right are emphasised. For those with an average income, earnings-related pensions are emphasised.  For the high-income people, the earnings-related pension, the capital income and income from work are the most important sources of income”, explains Rantala. 

Many other factors also affect income, such as wealth, health, social relations, housing and the possibility to adjust expenses to income. 

Pensioner’s income relative to that of the employed and the total population when measured in disposable income €/year, at 2020 level. In 1995–2020, the income of pensioners relative to the total population has alternated between 84 and 92 per cent, and in 2020, pensioners’ income relative to the income of the total population was 90 per cent. Relative to the employed population, the income of pensioners has varied between 72 and 79 per cent in the years of study, with a ratio of 77 per cent in 2020.

Disposable income

A person’s disposable income, or the equivalent income, is calculated based on the household’s disposable income. This includes all income received by the household, such as net earnings and capital income and pensions.

Study:  Pensions and pensioners’ economic wellbeing – development from 1995 to 2020

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