The Finnish pension system consists of earnings-related pensions, which are accrued by working in Finland, and national pensions, which are based on residence in Finland.
Earnings-related pensions and national pensions are paid as old-age pensions, disability pensions, cash rehabilitation benefit and survivors’ pensions. As of 2017 it has also been possible to get earnings-related pensions as partial old-age pensions and years-of-service pensions.
Employers must insure their employees, and self-employed persons must insure themselves with a pension provider. Pension providers include pension insurance providers, pension funds, pension foundations and in some sectors there are special pension providers.
Both employers and employees pay pension contributions. Employers deduct employees’ pension contributions from their salary and pay them to the pension provider. Self-employed persons pay their pension contributions themselves. Different groups are insured based on different pension acts. Pensioners get all their earnings-related pension from the same pension provider even if they have worked in various sectors and have been insured with various different pension providers during their working career.
Accruing entitlement to earnings-related pension
Employees begin to accrue pension at the age of 17 and for self-employed persons at the age of 18.
A pension reform came into force at the start of 2017 which means that employees and self-employed persons begin to accrue earnings-related pension at a rate of 1.5% of their annual employment earnings or self-employed persons’ employment income. However, there is a transition period of 2017-2025, when the annual accrual for persons aged 53-62 is 1.7 per cent of employment earnings or self-employed persons’ employment income.
When a pension is granted, the accrued pension is adjusted by a life expectancy coefficient, which adjusts pensions to the increase in life expectancy.
The national pension is a residence-based social security benefit, i.e. receiving it and the amount depend on the insurance period, i.e. the length of residence in Finland and the pensioner’s other pension income. National pensions are administered by the Social Insurance Institution of Finland (Kela).
Types of pension
Old-age pension paid in Finland consists primarily of earnings-related pension, which all persons in paid employment accrue during their working career. If your earnings-related pension is small or you are not getting any at all, your old-age pension is national pension and possibly guarantee pension, which are residence-based pensions.
Partial old-age pension leaves you free to work while drawing a pension: there is no limit on the work you do, but it is not required either.
Disability pensions are granted on the basis of permanent incapacity for work. Before actual disability pension, you can get cash rehabilitation benefit, i.e. time-limited disability pension. Rehabilitation is always the preferred option.
Years-of-service pensions can be granted to persons
- born in 1955 or later,
- who have reached the age of 63,
- who have done strenuous work for at least 38 years and
- whose working capacity is somewhat reduced.
Survivor’s pensions are paid to widows, widowers and children under the age of 18. Kela also pays orphan’s pensions to children under the age of 21 who are studying full-time. If you have lived abroad, you can get a survivors’ pension from Kela if you are covered by the Finnish social security system and the other conditions are met.
Moving abroad as a pensioner
For pensioners moving from Finland to another Nordic country, the same amount of earnings-related pension and national pension are paid as before moving. Housing allowance for pensioners is not paid abroad. Under EU regulations on family benefits, a child increase is paid to persons who get national pension or earnings-related pension from Finland. Guarantee pensions can only be paid to persons living in Finland. Guarantee pension recipients can, however, reside abroad temporarily without losing their right to their guarantee pension.
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