Pension reform on the door


Labour market organisations are struggling to negotiate a reform of the pension system. The reform aims to ensure the sustainability of the earnings-related pension system for the future. It goes without saying that a substantially larger number of Finns will be retired on pension and will live longer than in the past.

The need for reform was agreed in the pact on employment and growth between the labour market organisations in October 2013. The reform should be ready at the political level during autumn 2014 and implemented at the beginning of 2017 at the latest. The Finnish Parliament will formalise the final legislation.

The major role of both trade union central organisations and employers central unions is motivated by the fact that employees and employers pay most of the expenses of the earnings-related pension system. And the Government becomes involved once the labour market organisations reach a consensus.

The three trade union confederations Akava, SAK and STTK believe it is vitally important that in any reform of pensions the position of young people must also be guaranteed. The confederations are at pains to point out that in the Finnish system every generation pays pension contributions and later on receive their pension.

“Young people must be able to trust that the level of pensions will be sufficient in the future also and that financing pensions lies on a sustainable ground”, the confederations say.

The confederations see that at the moment the financing of the earnings-related pension is on a sustainable basis, but in the future that working careers need to be extended. Otherwise pensions will sink.

One of the most difficult topics on the table concerns the minimum pension age. At the moment work-related pension can begin from the age of 63 – 68. There is a carrot in the system: the last years in work give a proportionally higher pension than an early retirement. Some kind of bonus for those working longer will also be included in the new system, but that remains open as to how it will be in practice.

It is possible that the minimum pension age will be raised gradually to 65. However, keeping the flexibility of system is important to trade union confederations. They also want to guarantee that those in physically demanding work with a long working career must be taken into account.

Trade unions also stress that a big number of Finns do want to work longer, if there is work available. This is not the case as companies very often cut off older employees from their payrolls. To find a new job at the age of 55+ is very difficult.

Helsinki (21.08.2014 – Heikki Jokinen)