The proposal from Finland’s Prime Minister Antti Rinne to effectively redistribute assets in the country’s earnings-related pension system in favour of women on low pensions is an unhealthy solution to the country’s pension problems, according to pension funds.
Pensions alliance TELA – whose members include the large mutual pension insurance companies Ilmarinen, Varma and Elo – said it and the employers’ and workers’ groups that make up Finland’s tripartite system have rejected the idea put forward by Rinne in parliament on 7 November.
Rinne’s radical proposal is to use money from bonuses in the earnings-related pension system to boost the small pensions of women who missed out on contributions when they were taking care of children, before the law was changed to ensure such contributions.
Suvi-Anne Siimes, chief executive officer of Finnish pensions alliance TELA, told IPE: “I am not in favour of this idea if it is to be financed from the earnings-related pension system, because it makes retroactive demands.
“This is not a healthy way to solve the problems in society,” she said.
However, Siimes said she agreed that discussion was needed to find an answer to the issue of many elderly women in Finland having low pensions partly because their careers had been shortened due to them having taken care of children.
“But we have the national pension, and it would be appropriate to consider solving the problem through this, or to consider all the things that affect the living standards of those with very low pensions,” she said.
Such costs included medical expenses and other service charges the poorest pensioners had to pay, said Siimes.
The government’s proposal on topping up pensions for some older women is based on the 2019 programme of Rinne’s government.
That programme, laid out by the SDP-led government which took office in June, includes a pledge to start a tripartite review on how to improve the status of pensioners with the lowest earnings-based pensions within the employment pension system.
The review is also to examine ways to introduce a net increase of €100 to pensions that are less than €1,400 a month without increasing the level of pension insurance contributions, according to the programme.
Siimes predicted that while there has long been political discussion on the sustainability of pension systems – in Finland and elsewhere – the conversation would now focus increasingly on pension adequacy.
“It is just as important to consider whether pensions are adequate from the point of view of the individual pensioner, as it is to talk about pension costs,” she said.
In his efforts so far, Rinne was going in the right direction regarding the issue of pension poverty, Siimes said, with his government having already decided to raise the level of the national pension.
But this latest proposal from the prime minister appeared to be motivated by fiscal challenges and a desire to create political appeal by supporting a female cause, she concluded.