What is my pension security comprised of?
There are two forms of statutory pension in Finland: earnings-related pension and national pension. Earnings-related pension forms the foundation of your pension security and is supplemented, if necessary, by national pension.
In addition to the statutory pensions, you may also have voluntary pension insurance.
Earnings-related pension
Earnings-related pension is accrued from the earnings of your work career and any YEL income. It provides income security based on your earlier earnings level when you transition out of working life. The statutory employment pension insurance taken by the employer or entrepreneur serves as the foundation for earnings-related pension. The most recent pension insurance company under which you work was insured will pay your pension.
National pension
National pension supplements your earnings-related security if the amount of your pension would otherwise be low. The larger your earnings-related pension and other ongoing compensations from Finland and abroad are, the lower your national pension will be. The national pension is granted by Kela and additional information about the national pension and related income limits can be found on Kela’s website.
Other forms of pension and support
Any voluntary forms of pension you receive will not affect the amount of your earnings-related pension. However, if your voluntary pension is paid by a company, it may affect your national pension.
Even if you do not receive national pension, you can apply to Kela, for example, for a housing or care allowance for pensioners. Read more on Kela’s website.
How is pension accrued?
Earnings-related pension is accrued from work that is done:
- As an employee, you earn pension from any gainful work you have done if you are between the ages of 17–68 and the wages you receive for your work exceeds EUR 68.57 per month (in 2024).
- As an entrepreneur, you earn pension between the ages of 18–68 on the basis of the YEL income connected with your YEL insurance policy. Your YEL income must be at least EUR 9,010.28 (in 2024).
Additionally, pension is accrued from specific earnings-related social benefits such as:
- Unemployment allowance
- Parental allowance
- Adult education allowance
- Sickness allowance
You can also earn pension from time spent
- Studying for a university or higher education degree
- Caring at home for a child under the age of three.
You can check the amount of pension you have earned to this point from your own online pension record.
Pension from work
Pension is accrued at a rate of 1.5% of your annual salary or YEL income. You begin to earn pension as an employee at the age of 17 and as an entrepreneur at the age of 18. The age for entrepreneurs is higher because you can only conduct entrepreneurial activities from the age of 18.
The only exception to this rule is that entrepreneurs and employees aged 53–62 accrue pension at a rate of 1.7% per year for the years between 2017–2025. This exception stems from the transitional provision in the 2017 pension reform.
Pension is accrued until one reaches their maximum retirement age, which is based on the year of birth.
| Year of birth | Age when pension accrual ends |
|---|---|
| 1957 or earlier | 68 |
| 1958–1961 | 69 |
| 1962 or later | 70 |
Any work done alongside pension accrues additional pension at a rate of 1.5%.
Pension for unpaid periods
Pension is also accrued at an annual rate of 1.5% from earnings-related allowances, studies that lead to a vocational upper secondary qualification or a degree from a university and caring at home for a child under the age of three.
Pension accrued from earnings-related allowances is based on a set percentage of the earnings on which the allowance is calculated. This percentage varies for different benefits within a range of 55–117%.
The pension accrued during studies or while caring at home for a child under the age of three is calculated based on supposed earnings of EUR 857.15 per month (2024). These benefits did not accrue pension prior to 2005.
Starting in 2017, pension is generally accrued from unpaid periods between the ages of 17 and your maximum retirement age if, during that stretch of time, you do not withdraw any old-age or disability pension. One exception to this rule is the unemployment allowance, for which pension accrual ends already at your minimum retirement age.
Delaying your retirement is worthwhile
When it comes to earnings-related pension, the longer you work, the higher your future pension will be. If you choose not to retire at your minimum retirement age, you will not only accrue pension at the normal rate for your work but you will also earn an increase for late retirement.
This means that you will receive an increase of 0.4% for every month in which you delay your retirement beyond your minimum retirement age. So, if you delay your retirement, for example, by one whole year, your pension will be increased by a total of 4.8%.
The increase for late retirement is not accrued for any months in which you receive an unemployment benefit. The increase is also not accrued if you have already begun to receive old-age pension and you are working alongside the pension.
The life expectancy coefficient ensures a sufficient pension
Since 2010, pensions have been adjusted in accordance with the life expectancy coefficient confirmed by the Ministry of Social Affairs and Health. The life expectancy coefficient is confirmed separately for each age group in the year when the age group reaches the age of 62.
The purpose of the coefficient is to adjust the pensions to correspond better to estimated life expectancy in Finland. If the average life expectancy rises, the amount of the monthly pension decreases to ensure that the pension will last for one’s entire life.
The life expectancy coefficient confirmed by the Ministry of Social Affairs and Health for 2024 is 0.94692. This means that the old-age pension of anyone born in 1962 who retires in 2024 or later will be reduced by about 5.3%.
The life expectancy coefficient also affects survivors’ pension and disability pension granted to those who developed an incapacity for work in 2010 or after.
The confirmed life expectancy coefficients for the different age groups can be found on the website of the Finnish Centre for Pensions.
Your target retirement age represents the age at which you should retire in order for you to accrue an increase for late retirement that would compensate for the reduction caused by the life expectancy coefficient.