Pensions in Finland, like in any other country, are an instrument of social support for citizens. For those who could not earn a pension, other special payments are provided. The sources of financing for all these payments, as well as their size, differ depending on the form of the pension. Today we will dwell on each of the existing forms of pensions and the right of foreigners to receive them.
Types of pensions in the Finnish pension system
The pension system in Finland provides for three main types of pension payments:
- labor, professional pension (Työeläkkeet);
- national, national pension (Kansaneläkkeet);
- guaranteed pension (Takuueläke).
The payments received by a particular pensioner can consist of a retirement pension or both a retirement pension and a national one, depending on the size of the retirement pension. The guaranteed pension can supplement these two benefits, if necessary. Every pension in Finland in 2021 is paid by a specially designated organization.
Labor pension is payments that are generated from pension insurance. Insurance is the responsibility of all persons who work and receive a salary, regardless of the time of work and functions.
All employers are required to insure their employees if they are 17-67 years old and their monthly earnings exceed 58.27 euros. The amount of the insurance premium is tied to wages and is mutually funded by the employee and the employer. Despite the fact that the retirement age in the country starts at 65 years old, Finnish employers do not have the right to send an employee to retire until the age of 68 if he has a desire to work.
The amount of the contribution in 2017-2018 was carried out according to the following table:
| Year | Basic insurance premium,% | Employer's contribution,% | Contribution of an employee up to 53 years old and over 62 years old,% | Contribution of an employee aged 53 to 62,% |
|---|---|---|---|---|
| 2018 | 24.4 | 16,75-18,05 | 6.35 | 7.65 |
| 2017 | 24.4 | 16,75-18,25 | 6.15 | 7.65 |
Entrepreneurs and farmers independently form their labor pension. Up to 53 and over 62 years old, the size of their insurance contributions is 24.1%, at the age of 53-62 - 25.6% of labor income.
The professional pension system is private: all contributions are formed on the accounts of non-state pension institutions and cash desks, here are some of the most popular non-state pension funds that provide accumulation services:
- Eläke-Fennia;
- Eläke-Tapiola;
- Eter;
- Ilmarinen;
- Pensions-Alandia;
- Varma;
- Veritas Eläkevakuutus.
What kind of pension will be received in Finland directly depends on the size of the salary and the length of work experience. The amount of accumulated funds is determined as a share of earnings, depending on age, and from 2021 it is calculated as follows:
- the basic savings rate for persons aged 17-53 will be 1.5% of the salary per month;
- for persons aged 53-62 during the transition period (until 01.01.2021), the accumulation rate will be 1.7% of the salary per month;
- for those who continue to work after reaching retirement age, the savings rate will increase by 0.4 percentage points monthly. (previously a flat rate of 4.5% was set).
It is assumed that in order to receive a labor pension, a person leaves work and writes an application for the appointment of payments. He, nevertheless, can continue working at a new workplace, and there he will already have new pension savings.
National and guaranteed pensions are paid by the National and Social Security Service (KELA). The national and guaranteed old-age pension in Finland can be awarded to those who have not been able to earn a professional pension or whose size is too low.
In this case, the conditions are important: registration in the Finnish social security system and residence in Finnish territory for at least three years (for EU citizens) or five years (for other categories) after reaching the age of 16 (before the appointment of any state pension).
The possibility of receiving the national pension, as well as its size, depends on the availability of another pension monthly income, as well as the marital status of the pensioner: if he is married or in cohabitation, the amount of his national pension is reduced. The basic income to receive the maximum national pension must be 55.54 euros per month.
The guaranteed pension benefit is the minimum pension. Anyone whose combined Työeläkkeet and Kansaneläkkeet pension income is below the base guaranteed pension, which is as close as possible to the minimum subsistence level, can apply for it. In this case, it compensates for the missing difference to the required minimum value, regardless of the person's age, citizenship and other characteristics.
Also, Takuueläke is paid in cases where, at the time of reaching retirement age, the entity was unable to earn a labor pension and does not receive a national one.
In addition, there are such types of pensions as:
- Тyökyvyttömyyseläke - payments in the event of disability, if they are caused by illness or work injury, and the duration of the disability is more than 1 year;
- Tapaturmaeläke - payments due to forced retirement due to an accident at work or due to occupational disease;
- Рerhe-eläkettä - payments to children and widowers / widows on the occasion of the loss of a breadwinner.
Retirement age
Over the past 15 years, life expectancy in the country has increased by 4.5 years, therefore, in order to ensure the proper level of payments to pensioners, it was decided to increase the age at which they retire in Finland. A gradual increase model is envisaged until 2021. In accordance with it, the minimum retirement age is affected by the year of birth of the pensioner, and the age limit itself increases by 3 months every year, starting from 2021.
At the same time, along with the minimum, there is also a maximum age, above which the accumulation of pension rights within the framework of the pension insurance system does not occur, that is, it is flexible.
The basic age range for retirement pension is a minimum of 63 years and a maximum of 68 for persons born in 1954 and older. For the rest, a gradual increase is provided in accordance with this table.
| Year of birth | The lower limit of the retirement age in years | Age restriction for insurance in years |
|---|---|---|
| 1954 and earlier | 63 | 68 |
| 1955 | 63 years 3 months | 68 |
| 1956 | 63 years 6 months | 68 |
| 1957 | 63 years 9 months | 68 |
| 1958 | 64 | 69 |
| 1959 | 64 years 3 months | 69 |
| 1960 | 64 years 6 months | 69 |
| 1961 | 64 years 9 months | 69 |
| 1962-1964 | 65 | 70 |
| 1965- and younger | Depends on life expectancy. The age limit is expected to increase by 2 months per year from 2030. | 70 |
Thus, by 2021, retirement pension will be possible only after reaching the age of 65. After reaching the age of 68-70, the accumulation of pensions under the insurance system is not carried out. From 2021, the minimum age will be linked to life expectancy, so it remains at 65 for now.
The reform does not apply to public sector employees: depending on the sector, they are already 63-65 years old. Over the next few years, the lower qualification will also reach 65 years.
A similar minimum of 65 years is set for receiving a national or guaranteed pension. It can be assigned ahead of schedule to persons who have reached the age of 63, but in this case, its size is reduced by 0.4% for each month that remains until the age of 65. As the age for retirement pension rises, the age for the national one is also subject to increase.
Pension payments in Finland
The size of the pension in Finland primarily depends on the size of the earned income and the length of service. It is believed that an employee must earn for a full-fledged retirement pension over 38 years of work experience.During this time, enough funds should be accumulated on his retirement account for a dignified old age.
The amount of pension savings is calculated using a simple formula:
Annual salary x 1.5% ÷ 12 = monthly savings.
Example: 40 thousand euros x 1.5% ÷ 12 = 50 euros / month
At the same time, the accumulated funds are subject to indexation - special indices and coefficients are applied to them, which guarantee that the accumulated pension will retain its value at the time of the person's retirement and ensure purchasing power. Read more about pension indices here.
In addition, pension institutions are the largest investors in the country, and pension savings are also increasing at the expense of the funds they earn. At the same time, as a citizen ages, increasing coefficients are applied to his pension, which adjust the amount of monthly payments.
The pension amount can be calculated using the online calculator on the KELA website.
Considering all of the above, the average pension in Finland is a very average concept and does not always reflect the real picture. According to 2021 data, it was 1,656 euros per month, while the average amount of payments by age was 1508 euros per month. Payments for men are on average 32% higher than for women - 1,871 euros against 1,241 euros per month. In relation to the average earnings in the country, pension payments can provide about 50% of labor income.
The size of the national pension is much lower and, as we have already said, depends on the size of the other pension and marital status.
| Family status | The full amount of the national pension | Maximum monthly income for national pension | Income for which the national pension is not paid |
|---|---|---|---|
| Lonely pensioner | € 628.85 | 55.54 euros | 1 299.88 euros |
| In relationship | € 557.79 | 55.54 euros | € 1,157.71 |
The higher the pensioner's income in the range of 55-1299 euros, the lower the payments in the national system.
Guaranteed is the minimum pension in Finland. Its size is 775.27 euros per month, if the maximum monthly income before taxes is 768.59 euros.
If a person does not receive any income at all, he will receive a full Takuueläke of 775 euros.
Labor, national, survivor benefits are taken into account and reduce the guaranteed pension. Certain types of payments do not affect the amount of Takuueläke. Find out more about them on the Finnish Pension Service website.
Pensions in Finland in rubles will surprise our compatriots from Russia, but you need to understand that the costs in Suomi (housing fees, medical care) are much higher:
- The statistical average payment within the framework of a labor pension is 125.7 thousand rubles.
- Payments under the national system are more modest - the full national pension is 47.7 thousand rubles.
- The amount of guaranteed pension benefits reaches 58.8 thousand rubles, below which a pension in Finland cannot be even theoretically.
Pension procedure in Finland
Finnish retirement and pension payments are not automatic. A person intending to retire on a well-deserved rest must submit an application to the competent authority appropriate to his situation. You can find and download the necessary forms, as well as familiarize yourself with the rules for filling them out here or here.
Applications for retirement pension are usually submitted to the institution that generated your savings for the last 2 years, although they can also be submitted to any other pension fund or to KELA. Applications for a national or guaranteed pension must be submitted to KELA. You can also apply online.
To apply online, you must identify yourself using Internet banking services. Together with the application, scanned copies of the necessary applications are also uploaded to the network. The filing procedure is straightforward if you follow the instructions in the system.
You can declare your well-deserved rest orally, including by calling 020 692 202 or at the customer service point. You can find the required branch of the State Pension Service using this service.
Before receiving a pension in Finland, you need to collect a package of documents. This is usually an identity card, tax card (Verokortti) and bank statement. Pre-check the list of required documents with your consultant, as it may differ depending on the type of pension.
The application must be submitted in advance, the processing time is 6-8 weeks. Before calculating the pension, the employment relationship with the employer must be terminated.
Based on the results of the examination of the application, a pension card (Työeläkekortti) is sent to the applicant's home address. This is a kind of pension certificate confirming the achievement of retirement age and the purpose of insurance payments. It also confirms other benefits guaranteed by the pension status of the subject.
After assignment, payments in the national system are made on the 7th day of each month, payments in the guaranteed system - on the 22nd day of each month. The dates of payment of the labor pension are determined independently in each fund.
If the decision made does not suit the pensioner (for example, the pension is denied or its size is lower than it should be), he has the right to appeal it within a month. Instructions on this are contained in the decision text.
Discounts, benefits and allowances for retirees
Various discounts and benefits are provided for pensioners depending on the municipality. This can be, among other things, a benefit for:
- travel by train, intercity bus or air transport;
- travel in local public transport;
- entrance tickets to municipal sports centers, social and entertainment events.
In addition to these discounts, retirees are entitled to a variety of allowances and benefits, including:
- allowance for a child under 16 years of age in the amount of 22 euros per month, including if he does not live with a pensioner, but he covers his expenses at a minimum amount of 156 euros per month;
- housing allowance, the amount depends on the amount of income and is a maximum of 507 euros per month;
- care allowance when the ability to take care of oneself has significantly decreased - from 62 to 325 euros;
- front-line allowance for veterans in the amount of 50 euros, but can be increased to 240 euros;
- basic security allowance - awarded if the daily basic expenses are higher than all income.
Pension for foreigners
Taking into account the described grounds for payments and their amounts, all migrants are wondering how to earn a pension in Finland. This shouldn't be a problem.
Insurance is compulsory for anyone who earns wages in Finland as an employee or as an entrepreneur. The citizenship of the worker or the country of his taxation does not matter.
Foreign workers are covered by the same statutory labor pension insurance as for workers who are Finnish citizens. At the same time, the pension can be paid even for a relatively short period of work, including just a few months: the length of stay and work in Suomi is not of fundamental importance for the appointment of Työeläkkeet.
Another thing is the pensions of foreigners in Finland under the national and guaranteed systems from KELA. To get them, we repeat, two main conditions must be met:
- Registration with the social insurance system.
- The minimum period of permanent residence is 5 years after reaching the age of 16 (for non-EU citizens, for citizens - 3 years).
Until this deadline is reached, foreigners are not entitled to pension benefits from the state. If this period of residence was reached earlier, after the 16th birthday of the foreigner, and after that he returned to Finland, for example, under the repatriation program, this period will be counted and the foreigner will be able to apply for the state old-age pension.
Note that the pension in Finland for Russians does not differ in size from payments to indigenous Finns. Their size is determined solely by the salary or the compulsory period of residence in Finland.
Pension payments in other European countries
Finland is a vivid example of the successful organization of the pension system, where payments in favor of pensioners have not only a high replacement rate for lost earnings, but also provide their recipients with an adequate standard of living. Not all pensions in European countries can boast of this result. Here are some prime examples.
| Country | Retirement age, years | Average pension |
|---|---|---|
| Germany | 65.3 | 1200 euros |
| France | 62 (goes up to 67) | 1200 euros |
| Spain | 65 (goes up to 67) | 800 euros |
| Poland | 60-65 | PLN 2,100 or EUR 502 |
| Denmark | 67 | 1600 euros |
| Norway | 67 | 1800 euros |
| Sweden | 65 | 1870 euros |
Conclusion
The Finnish pension system appears to be more than successful, especially for migrants from Russia. Every Finn who officially works for a Finnish employer can earn a pension that is quite decent by European standards throughout his life.
If he has not been able to earn his own support, a payment will be assigned under the national or guarantee system. These rules also apply to foreigners.
