Labour market organisations have reached an agreement on the pension reform. According to the Government, the reform meets the objectives set for it, including the strengthening of public finances and pension funding. Pension insurance companies did not participate in the negotiations.
A key change in terms of employer customers is the stabilisation of the TyEL contribution rate at 24.4% for the years 2026–2030.
Pensioners are subject to an inflation stabiliser, which will be in use from 2030 onwards. It will reduce the index increases of earnings-related pensions if the general consumer price level increases faster than wages over a two-year period.
The reform does not include any other changes to pension benefits. For example, there will be no changes to retirement ages or pension accrual rates.
Pension reform aims to improve investment returns
This latest pension reform will particularly affect the investment of earnings-related pension assets. The reform allows earnings-related pension companies to increase the equity weight of their investment portfolios with the aim of improving investment returns.
Additionally, the funding of old-age pensions will be increased. In the future, a larger share of the pension contribution will be transferred to funds. The aim is to increase the funds in order to reduce the need for an increase in pension contributions in the longer term.
The reform also includes an agreement to conduct a study to find ways to promote the prevention and treatment of mental health issues, particularly among working-age people.
The pension reform will now be forwarded to legislative drafting. The changes will enter into force in 2027 at the earliest.
Also read:
- Blog: Will the younger generation pay for the pension reform? (6 February 2025)
- Finnish Centre for Pensions: Pension reform strengthens pension financing (24 January 2025)
