The financial sustainability of Finland’s pension system is among the best in the EU, says the head of the country’s pensions centre.
“A comparison with other EU countries shows that the Finnish pension scheme does not offer super-high pension provision, but the scheme is egalitarian and keeps the poverty risk of pensioners fairly low,” said Hannu Uusitalo, director of Eläketurvakeskus, the Finnish Centre for Pensions
“The Finnish pension expenditure as a share of GDP is below the EU average. This goes well with the fact that the financial sustainability of the Finnish pension scheme is among the best when comparing the EU countries.”
The centre has studied the incomes of people who retired in 1996-1997. For old age and disability pensions the gross replacement rate was on average 65% - and nine out of 10 retirees had a gross replacement rate of 50-75%.
Taking other factors into account, Uusitalo says the income of pensioner households in 2003 was on average some 70% of that in economically active households.
He says that the income level of 65-year-olds compared to the rest of the population is below the average for the EU15.
“On the other hand, Finland seems to come among the best countries as regards the fact that in Finland the internal income differences among the population of retirement age are among the smallest for the old EU countries,” says Uusitalo.
“The poverty rate of pensioners is below the EU average. The Finnish poverty rate is increased especially due to older women's low income level.”