FINLAND – Finnish employers and trade unions have until Monday (November 12) to reach agreement on structural changes to the country’s first pillar pensions system, before the government steps in to take action.

The discussion between the social partners is over plans to encourage Finnish employees to work longer and make greater pension contributions by amending the age at which contributions can be made and creating disincentives to early retirement.

Lauri Koivusalo, managing director of the Helsinki-based LEL first pillar pension fund,
says discussions are at a critical stage and that the government has threatened to intervene next week if no progress is made.

He explains the background to the debate:
“In Finland today we calculate the pension for employees under different employers in different ways.
“The main aim today is that we take all the wages over a lifetime and calculate the pension from this.”

Koivusalo says further discussion concerns the introduction of more flexibility for the Finnish pension age.
“At the moment it is between 62 and 67 and the calculation is different so that you get a smaller pension if you take it earlier.
“The nearer to 67 you get it’s quite simple you have a better wage to earn this pension – you usually get 1.5% per year, but this may become 3% at the end to encourage people to work longer.”

The current legal pension age in Finland is 65, but it is possible to take early retirement at 60
It is expected that the penalty for retiring early will be increased under the new plans. Pension calculation normally starts at 23 years of age and the legislation also envisages a lowering of this age level.

Koivusalo notes: “There is a group that is discussing this at the moment and they are mostly trade unions and employers.
“The aim is that next Monday it should be ready. After this the government has said they will take the issue into their own hands if nothing happens.”
“I think they will try very hard to find a solution because they think they will have no right to say anything more if the government takes up the issue.”