The partial early old-age pension has steadily grown in popularity. It allows you to receive a part of your earnings-related pension before the full retirement age. We compiled some common questions and answers for those considering a partial pension.
Why apply for a partial early old-age pension?
- The partial early old-age pension is for those who want to receive a pension but are not yet old enough to be entitled to a full old-age pension. An example would be someone who wants a lighter work week towards the end of a long career.
- The partial early old-age pension is also for someone who has reached the age of retirement but wants to continue full-time work. You do not have to end or change your work to receive a partial early old-age pension, as is the case when retiring on a full old-age pension.
- You do not need a particular reason to receive a partial early old-age pension and no reason will be asked during the application process.
How does a partial early old-age pension affect my future old-age pension?
- The effect on your future old-age pension depends on the starting date of your partial early old-age pension.
- If the partial early old-age pension begins before the retirement age, a permanent reduction for early retirement will be applied to the partial pension. The reduction is 0.4 per cent for each month short of the full retirement age. If the partial early old-age pension begins a year before the retirement age for a full pension, the reduction to the partial old-age pension is 0.4% x 12 months = 4.8%. The reduction is permanent, which means that it will also be applied to the granted pension part once it turns into an old-age pension.
- If the partial early old-age pension begins after the full retirement age, no reduction will be made, but an increase for late retirement will be applied to the pension.
- If you work alongside a partial early old-age pension, you will also accrue new pension based on your wage or confirmed income from entrepreneurial activities. The accrual percentage is the same as it were without a partial early old-age pension.
How does a partial early old-age pension affect my working?
- The partial early old-age pension does not affect your work.
- You may continue working without restriction.
- If you want to make changes to your employment relationship, for example, to work shorter hours, you have to negotiate with your employer.
- You do not need to work alongside a partial early old-age pension.
- A self-employed person’s insurance obligation continues while working on a partial early old-age pension. The confirmed YEL income is based on your work input, so if you reduce the input of your entrepreneurial activities when retiring on a partial early old-age pension, you should revise your YEL income.
- Since a partial early old-age pension does not require changes to the employment relationship, the pension provider does not send the employer any information when processing the partial early old-age pension. If you want to discuss the issue with your employer, for example, to make changes to the employment relationship, you can do it yourself.
Can I receive a partial early old-age pension if I am unemployed or about to become unemployed?
- You may apply for the payment of a partial early old-age pension even when unemployed.
- The partial early old-age pension does not affect your unemployment benefit if you receive earnings-related unemployment allowance or basic employment allowance from Kela. You can be paid both an unemployment allowance and a partial early old-age pension at the same time.
- The partial early old-age pension may affect the labour market subsidy paid by Kela, which is a discretionary benefit. You can check the effect of a partial early old-age pension on your labour market subsidy in advance from Kela.
- The payment of your partial early old-age pension will continue unchanged even if you become unemployed during the partial early old-age pension.
Can I receive a partial early old-age pension if my work ability is reduced?
- The partial early old-age pension can be granted regardless of work ability. If the reduction of work ability is prolonged, you should check if you are eligible for a disability pension before applying for a partial early old-age pension.
What else should you consider?
- Your taxation will change when your pension begins. Your tax percentage depends on the combination of all your income. Your tax percentage may rise quite high if you receive a pension alongside full-time work. You can enquire about the impact of a partial early old-age pension on your taxation in advance from the tax office. Ask us for a calculation about a partial early old-age pension beforehand.
- If you are receiving social benefits, check the impact of a partial early old-age pension on them before applying for it. If you have been receiving a sickness allowance for a longer period, enquire if you are eligible for a disability pension before applying for a partial early old-age pension.
- You can cancel your partial early old-age pension within 3 months of receiving the decision if you change your mind. However, you should plan properly ahead to save the trouble.
Checklist for someone planning partial early old-age pension:
- Ask for advance information and calculations from Veritas so that you have good basic information about, for example, the pension reduction before your decision.
- Plan changes at work in advance:
- Contact your employer if you want changes to your employment relationship.
- Revise your confirmed income if your entrepreneurial activities are changing.
- Enquire about the impact of a partial early old-age pension on taxation and other benefits.
- Apply for the pension in our online service about one month prior to the beginning of your partial early old-age pension.
