2. earning-related pension that accrues from work
Finnish Centre for Pensions2
Central body for the earnings-related pension
scheme over 50 years in Finland
Provides services common to the decentralised
earnings-related pension scheme
Carries out research, collects statistics, follow-up
of reforms, keeps register over employment
relationships
House who knows pensions
3. Finnish Centre for Pensions 3
Health
insurance
Accident
insurance
National pension
Guarantee pension
Pension
insurance
Other
(e.g. voluntary
supplementary
pensions)
Unemployment
insurance
Employees’ group life
insurance
Earnings-related
pension
Social Insurance
4. • Earnings-related pension
– Secures a reasonable
consumption level after
retirement
– Right to pension earned
through work
– Benefit paid by earnings-
related pension
institutions
– No pension ceiling
Finnish Statutory Pension Provision
• National pension and
guarantee pension
– Secures a minimum level
of income
– Supplements a small
earnings-related pension
– Amount depends on
time of residence in
Finland and family
relations
– Benefit paid by the Social
Insurance Institution of
Finland (Kela)
Total pension =
Guarantee pension + National pension +
Earnings-related pension
5. Total pension in 2013
0
250
500
750
1000
1250
1500
1750
0 500 1000 1500 2000 2500 3000 3500
Pension
EUR/month
Wage
EUR/month
Guarantee pension
National pension
Earnings-related pension
Net
6. Earnings-related pension accrues from
working!
The Finnish Centre for Pensions6
The earnings-related pension is a central part of
Finnish social security.
The earnings-related pension ensures that
employees and the self-employed can maintain their
standard of living after retirement.
The longer your working career, the better your
pension!
The residence-based national pension and the
guarantee pension secure a minimum income.
Together, the earnings-related and the national
pension ensure the wellbeing in case of disability
and old age.
7. Earnings-related pension Contributions
Finnish Centre for Pensions7
Employers and employees pay their share of the
pension contribution
Employer withholds employee’s share of the
contribution from wages and pays the entire
contribution to the pension provider
Earnings-related pension contributions are fully
deductible in the taxation for employees
8. Earnings-related pension Contributions
Finnish Centre for Pensions8
Contribution percentages are affirmed annually by
the Ministry of Social Affairs and Health
Employer with
insurance contract
23.4% when payroll <
EUR 1,879,500
Contribution category
model when payroll
> EUR 1,879,500
Occasional
employer
23.8% Employee’s
share
5.15%
< 53 yrs
6,50%
≥ 53 yrs
9. Determining the
Earnings-related Pension
Finnish Centre for Pensions9
Old-age pension accrues as of age 18
Pension accrual rates:
18–52 yrs: 1.5%
53–62 yrs: 1.9%
63–67 yrs: 4.5%
Also on the basis of social benefits determined by law, for
periods of home care of child under the age of three and for
periods of study
Earnings adjusted by wage coefficient in line with the level at
the start of the pension
Proportioned to life expectancy by means of life expectancy
coefficient
Earnings-
related
pension =
annual
earnings X
accrual rate
10. When and on which pension?
The Finnish Centre for Pensions
• Retirement due to illness at age 18 – 62
– Vocational rehabilitation (for those in working life)
– Cash rehabilitation benefit
– Disability pension
• Flexibly on old-age pension according to own choice at
age 63-68.
• An elderly employee or self-employed person may
reduce his or her workload by retiring on a part-time
pension.
• Survivors’ pension secures the income of the surviving
spouse and children if the family’s breadwinner dies
11. How Pension Accrues
• Pension accrues from all wages earned between the ages of 18 – 68 years
• Pensions accrues also for studies and for staying at home with one’s own child under the
age of 3
• Working abroad: according to the rules of the country of employment
Illustration: Anssi Keränen
ANNUAL EARNINGS
X
ACCRUAL RATE
12. Funding of Earnings-related Pensions
• Everyone is first a payer, then a receiver
• Part of the contribution is funded for future generations
Illustration: Anssi Keränen
Pension recipient
EUR 20.5 bn
+ public sector
Employee
Employer /
Self-employed
EUR 21.5 bn
Earnings-related
pension insurer
EUR 155 bn
13. Is There Enough Money?
• The number of retired persons grows and people live longer
• Working lives have to be extended to maintain a reasonable contribution level
• Returns on earnings-related pension funds are of great significance
Illustration: Anssi Keränen
OLD-AGE DEPENDENCY
RATIO
OLD-AGE DEPENDENCY
RATIO
14. Check How Much Pension You Have Earned!
• You can access your Pension Record online (only in Finnish and Swedish) at
ww.tyoelake.fi or receive a printed record to your home address every third year
Illustration: Anssi Keränen
15. Sources of Information
• www.tyoelake.fi
• www.keva.fi
• www.kela.fi
• Finnish Centre for Pensions
customer information 029 411 2801
switchboard 029 411 20
e-mail firstname.lastname@etk.fi
visiting address Kirjurinkatu 3
postal address FI-00065 ELÄKETURVAKESKUS
Finland
Eläketurvakeskus 15
