Study: Every fifth Finn claims the partial old-age pension
The most common age of claiming the partial old-age pension is 61. When viewed by age cohort, every fifth person entitled to the pension claims it – men more often than women. This is revealed by a recent study conducted by the Finnish Centre for Pensions.
Each year, more than 10,000 Finns retire early. They claim the partial-old age pension and draw pension before reaching their retirement age.
“Finns seem to need the option of flexible retirement. The partial old-age pension was introduced in 2017. Between 2017 and 2020, more than 47,000 persons claimed this benefit,” economist Satu Nivalainen (Finnish Centre for Pensions) says.
According to Nivalainen, claiming the partial old-age pension has become clearly more common. When viewed by age cohort, every fifth person claims it by the time they reach their retirement age – men more often than women.
“The partial old-age pension can be claimed at age 61, the most common age of claiming the benefit. One tenth of all 61-year-olds claim the partial pension each year,” Nivalainen explains.
Majority of early claimants are employed, many with a long career
An ample 70 per cent of early claimants of partial old-age pension were employed before starting to draw the pension. Unemployment is related to one-quarter of all claims for an early partial old-age pension. Unemployed men claimed the pension more frequently than others.
“Early claimants have mostly worked long careers: 40 per cent had careers spanning 35–40 years and 30 per cent had worked for 40 years or more,” Nivalainen of the Finnish Centre for Pensions states.
The self-employed claim the pension more actively than others. Slightly less than 15 per cent of the early claimants are self-employed and 80 per cent have a background as employees. Among male claimants the biggest socioeconomic group are manual workers, among female claimants the majority are lower-level employees.
Claiming a partial old-age pension is less common in the public sector. Around 30 per cent of partial old-age pension claimants work in the public sector.
Average duration of partial old-age pension grown
On average, in 2017, the partial old-age pension was drawn for 22 months before reaching the retirement age. In 2020, it was drawn for 29 months. This is partly explained by the higher eligibility age for old-age pension.
“The retirement age has risen by three months for each cohort while the earliest eligibility age for old-age pension has remained at 61. Since the retirement age continues to rise, it would seem that persons will draw the partial old-age pension for a longer period than before,” Nivalainen assesses.
Only two per cent claim partial old-age pension late
The partial old-age pension can also be claimed late, after reaching the retirement age.
“Late claiming of a partial old-age pension is much less common; each year, only two per cent of those eligible utilise this possibility. The highly educated with long careers and a higher income are more likely to claim late than others.
On average, late claimants have drawn the partial old-age pension 12 months after reaching their retirement age.
Majority draws half of their accrued pension
The partial old-age pension allows for the claimant to draw half or a quarter of the pension they have earned during their working life.
Drawing a 50-per-cent pension is clearly the most popular option. In 2017, around 87 per cent of all partial old-age pension recipients drew half of their accrued pension. In 2020, the corresponding share was 82 per cent.
The average monthly gross old-age pension was 810 euros. The median was 720 euros.
The study by Satu Nivalainen, Aart-Jan Riekhoff, Sanna Tenhunen and Janne Salonen is based on register data of the Finnish Centre for Pensions. The data covers Finnish citizens who started to draw and those who could have started to draw a partial old-age pension in 2017-2020.
Partial old-age pension – a picture of claimants in 2017-2020
Partial old-age pension in a nutshell
- Replaced the part-time pension in connection with the 2017 pension reform.
- Allows for those who have turned 61 to draw a quarter (25%) or half (50%) of their accrued earnings-related pension.
- The component taken early permanently reduces the pension by 0.4 per cent each month.
- The partial old-age pension can also be drawn late, after reaching the old-age retirement age. If the partial old-age pension is taken out late, the component drawn late is increased by an increment of 0.4 per cent for each month that the pension is taken late.
- No monitoring of working hours and wages. You can be unemployment or working and still draw this benefit.
Partial old-age pension calculator tells you how much your partial old-age pension could be
Try the calculator in Tyoelake.fi to find out how much your partial old-age pension could be. You can use the calculator if you were born between 1956 and 2004.