The retirement age in Finland is likely to increase by two years from 2015, Prime Minister Jyrki Katainen said last week. Speaking on the current affairs television programme A-Studio, Katainen said Finland’s ageing population structure is one of the main reasons for the reform.
“The crucial thing that has changed in Finland is that we have fewer working-age people paying taxes and more elderly people who deserve proper care and services. Expenditure no longer matches funds so further cuts will have to be made,” Katainen said.
In the last week of November, Finland introduced a budget saving programme for 2014, which included cuts and tax increases worth €5.5bn. Services to feel the cuts include libraries and care for the elderly.
“We will have to introduce further cuts in important areas to make savings. Another alternative would be to ignore the situation and let Finland’s debt grow, which would lead to uncontrollable chaos,” Katainen said.
Katainen expects the retirement age to go up by two years from 2017 but noted the finer details of the reform will be known by autumn next year. “Rather than focusing on the additional years in working life, it is more important to tie retirement age to life expectancy. As we live longer now, it is common sense also to work longer,” he added.
Finns currently retire at 60.9 years on average, although the official retirement age for a national pension is 65 years and between 63 and 68 for an earnings-related pension. The life expectancy of a 60-year-old Finn is forecast to increase by five years over the coming forty years, according to the Finnish Centre for Pensions (ETK).
Jukka Rantala, managing director of ETK, agreed that the most pressing reason for an increase in retirement age is the strong growth in life expectancy.
“It is possible to guarantee a sufficient level of pensions only if years in working life increase hand-in-hand with life expectancy. The retirement age should depend on the birth year of the employee. The increase should not be too great in the first instance and the starting point for the reform should be known by citizens well in advance,” Rantala told IPE.
There is consensus that labour market organisations will present pension reform proposals by autumn 2014. Parliament will receive a list of the necessary legislative changes after the general election of April 2015, and the reform will come into force by 2017.