A typical recipient of a partial old-age pension is a 61-year-old man with an average income from work in the private sector. The average partial old-age pension is an ample 800 euros per month. A review of the first year of this new pension type reveals that almost all applicants applied for a 50% share of their old-age pension.
By the end of 2017, a total of 14,000 persons had applied for a partial old-age pension. Roughly 12,500 started to get the pension in 2017. As expected, the beginning of the year (February, in particular), saw a peak in submitted applications. During the spring, the rate of applications evened out and stabilised in the autumn at nearly one thousand applications per month.
Most of the applicants were men born in 1956. Every tenth male born in 1955 and 1956 applied for a partial old-age pension. The rate of female applicants born in those years was slightly lower.
Four out of five applicants were working when applying for the pension. Roughly 14 per cent were unemployed while the rest were outside the labour force.
Of those working, one fifth were self-employed. About 70 per cent of the applicants were working in the private sector.
“The self-employed seem to be particularly keen to apply for the partial old-age pension. Every tenth active self-employed person above the age of 60 grabbed the chance to retire on a partial pension last year,” says Jari Kannisto, Development Manager at the Finnish Centre for Pensions.
Most applicants have an average income
The average annual earnings of the applicants who were working was 41,000 euros (€46,000 for men and €35,000 for women). The older wage-earners stood out among the applicants due to their clearly higher-than-average earnings.
Nearly 90 per cent took out the maximum amount, that is, half of their pension. Their average partial old-age pension is 810 euros per month (900 euros for men and 680 euros for women). The median pension was 720 euros per month.
The earnings-related pension that the partial old-age pension recipients have accrued is of the same amount as the average earnings-related pension of those who retired on an old-age pension: 1,800 euros in 2017.
“In many ways, those who selected to retire on this new pension type seem to be ordinary working-aged people who are approaching their retirement age. Perhaps they want a bit more flexibility in their last years of work,” Kannisto explains.
On average, people retired on the partial old-age pension two years early. As a result, the part of the pension they withdrew was reduced by 70 euros per month. Last year, those born in 1956 reached the early retirement age. They retired nearly two and a half years early. The portion of the pension they withdrew was reduced by almost 100 euros per month.
Partial old-age pension
- replaced the part-time pension in the 2017 pension reform;
- offers the possibility for 61-year-olds or older to take out a quarter (25%) or half (50%) of the pension funds they have accrued so far;
- is adjusted with both the life expectancy coefficient and a deduction for early retirement of 0.4 per cent per month when taken early (or an increase of 0.4 per cent when taken late);
- reduces/increases the pension amount permanently;
- no restrictions as to how much you can work or earn;
- you can be unemployed or working while drawing the pension.