Key players in Finland’s pensions industry are warning that the current debate in the Nordic country about cutting pensions to shore up state finances is damaging trust in the system.
The idea has gained currency particularly since the Finnish Economic Policy Council (Talouspolitiikan arviointineuvosto) at the beginning of February suggested measures such as eliminating pensions accrual for unpaid periods, including unemployment and parental leave, could help stem Finland’s rising public debt, but avoid affecting the lowest income earners.
The official independent expert group said in its 2025 report that the pension reform currently taking place, aimed at bolstering public finances, particularly by increasing expected returns of pension funds with higher equity allocations, did not help to curb the growth of public debt.
Finance minister Riikka Purra responded to the report, saying that in the next few years, cuts to pension accrual for unemployment, qualifications and the widow’s pension were “certainly on the table”, national broadcaster YLE reported.
But she stopped short of supporting cuts to pension accrual from parental leave, citing the need to encourage Finns to have children.
Finland has a high debt-to-GDP ratio compared to most other Northern European countries. According to the Finnish central bank, the ratio is set to exceed 88% for 2025, and forecast to rise to 93% in 2028.
Commenting on the debate around cutting pension rights in the next government term following the April 2027 general election, Mikko Karpoja, chief actuary at mutual pension insurance company Elo, said the discussion itself was harmful to the pension system.
“This winter’s debate about pension rights has caused a new blow to trust in the pension system,” he said in a blog last week, adding that it would probably take years to repair that confidence.
“Pension rights should be developed according to the needs of the pension system so that the benefits are also perceived as fair and the permanence of the pension system can be trusted,” he noted.
While the Economic Policy Council had proposed automatic stabilisers for the pension system, Karpoja said that introducing such a mechanism for the whole pension system would be difficult because it consisted of several subsystems with different financial positions.
He asked: “How could automaticity be applied fairly?”
At Finnish pensions lobby TELA, director of communications and public relations Mikko Koskinen also said the talk of pension cuts was harmful to wider goals.
“The discussion about cutting pensions fuels uncertainty and slows down the economic recovery,” he said on Monday, citing an assertion to that effect by Jaakko Kiander, chief executive officer of Finland’s largest pension fund Keva at the beginning of this year.
“That is why the earnings-related pension insurers are proposing measures for the next government term to increase the wage bill, which is the basis for paying earnings-related pensions,” Koskinen explained.
TELA recently launched a range of goals its members wanted to see included in the next government programme, such as raising the level of education in Finland.
“Is now really the time to cut future generations from the very part of social security whose funding is on a sustainable basis?” he said, referring to occupational pensions.
He said the earnings-related pension system was being wrongly portrayed in the debate variously as a burden on competitiveness, a pile of money to draw on for the deficit-ridden state budget and a system of young people financing the leisurely retirement of age groups which had prospered during decades of growth.
Earnings-related pensions were not state money, he argued, but mainly funds paid by employers and employees, which had been funded in private companies, funds and foundations, as well as the public sector pension insurer Keva and other public law pension institutions.
“Also, young people do finance the pensions in payment, but so do all working people and future generations after them,” he continued, adding that the focus should therefore be on what kind of opportunities the age groups entering working life would have in the future.
“Intergenerational fairness cannot be built and assessed only within the pension system,” Koskinen said.
Meanwhile, Timo Viherkenttä, a university professor and former CEO of the State Pension Fund of Finland, as well as former deputy CEO of Keva, has added his voice to the discussion, arguing that pensions should indeed be cut when other social benefits are being cut — and that taxation is the easiest way to achieve such state budget belt-tightening.
“All options should be genuinely on the table and under consideration, so that all the advantages and disadvantages associated with the different options can be considered,” he told YLE at the end of last month.
Viherkenttä said it was unsustainable for pensioners to be left out of public spending reductions, being a third of the adult population.
As soon as the current pension reform had been completed, he said, the next reform should be launched.
“Taxation could include a pension income deduction and an additional tax on large pensions,” Viherkenttä proposed.
