Dr. Kari Puro does not expect raised retirement age to affect real age of retirement

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The decision by the government of Prime Minister Matti Vanhanen (Centre) to raise the minimum age of retirement to 65 could end up being largely without any real impact.
      “In the past, an absolute increase in the age limit has not led to a real increase in the age when people retire”, says Dr. Kari Puro, who has been a key figure in promoting changes in Finland’s work pension system in the past couple of decades.
      Before he retired himself, Puro headed a pensions working group with members mainly from Finland’s central labour market associations.
      Both Puro and the labour market organisations agree that the time that people in Finland stay at work should be lengthened. He says that decisions that have already been made have had a positive effect in this regard.
     
In the pension reform of 2005 people were given the possibility to retire flexibly between the ages of 63 and 68 at a time of their choosing.
      The system contains a carrot, under which the annual accrual of pension funds will increase the longer a a person stays at work. On the other hand, the so-called life expectancy coefficient will start cutting monthly pensions the longer a person remains at work.
      The decline in pensions caused by the coefficient can be offset by working longer
      Puro says that the effects of the accrual rules and the flexibility are positive. “Employment among the ageing 55-65-year-olds has dramatically grown, almost doubled. This has had a significant effect on the goal that Vanhanen’s government seeks with its decision - a real increase in the retirement age”, Puro says.
     
The influence of the life expectancy on the length of working careers is not known, because the coefficient will have its first impact on pensions in 2010.
      “The government cannot know what kind of an impact the life expectancy coefficient has had. It did not wait and see if this might have been enough”, Puro says. He feels that the government cannot have any facts available on a possible positive impact of its pension reform on the lengthening of the time that people remain at work.
     
Puro feels that one negative effect of the government’s decision is that it will narrow the possibility of the individual to choose when to retire.
      Esa Swanljung, managing director of the Finnish Pension Alliance TELA, fears that setting a minimum age of 65 will lead to a rush of people seeking early retirement.
      Swanljung says that previous experiences of increased age limits have been negative. “It is also our goal that people should stay at work, but the model that the government is putting forward is wrong.”
     
A fresh opinion poll shows that a majority of Finns are opposed to raising the minimum retirement age to 65. A survey commissioned by the Finnish Broadcasting Company (YLE) found that 62 per cent opposed raising the retirement age, while about one in five were in favour of the move.
      The greatest amount of support for raising the retirement age came from respondents who support the conservative National Coalition Party. Nearly a third of supporters of the Centre Party were also in favour of the change.
      Supporters of parties of the left were most clearly opposed to the government’s plans.
      Those with higher incomes had a slightly more positive view of a higher retirement age than those with low and medium incomes.


Previously in HS International Edition:
  Finns retire earlier than citizens of other Nordic countries (2.3.2009)
  Organised labour angered by government decision on old-age pensions (26.2.2009)
  Government decides on gradual raising of minimum age for old-age pension to 65 (25.2.2009)
  Report calls for nearly 5-year increase in retirement age (23.1.2009)

See also:
  Minister Liisa Hyssälä: Old-age pension reform also calls for improvements to working conditions (3.3.2009)

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