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Finnish working group to examine future pension reform

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  • Finnish working group to examine future pension reform

FINLAND - The Finnish government and representatives from labour market organisations have agreed to extend the remit of the working group on the extension of working lives.

In a meeting earlier this week, participants accepted that the increase of life expectancy has been more rapid than previously projected, which could lead to a situation where pensions will be significantly lower than planned when the 2005 pension reforms were drafted.

Representatives from the government and labour market organisations also recognised that unless working lives are extended, the reduction in pensions would have a negative impact on both purchasing power and the tax revenue.

The findings of one of the two working groups established in March 2009 was presented to the government in February on improving wellbeing at work and reducing disability pensions, while the second group was unable to agree on increases to retirement ages. (See earlier IPE article: Finland mulls reforms)

Now representatives have agreed working life issues are also important in stabilising the economy and making public finances sustainable.

Therefore the mandate for the working group now has a focus on three objectives related to the reform of the earnings-related pension scheme, including making pensions sustainable without affecting economic stability. They are:

A sufficient level of earnings-related pension benefits needs to be secured in circumstances where life expectancy coefficients result in future pensions being considerably lower than projected. Sustainability of earnings-related pension scheme financing needs to be secured by safeguarding the development of pension insurance contributions in a way that does not weaken employment and economic growth The average retirement age needs to be raised sufficiently so that the above two objectives can be met

The government added in a statement that the purpose of the working lives group would be to "outline new minimum objectives and map out different possibilities to develop the earnings-related pension scheme in order to meet the objectives, without taking any position on any single alternative".

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

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