Pension changes set to lead to longer working careers
Life expectancy coefficient to cut pensions of today’s 30-year-olds
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Changes are to be implemented in the method of calculating old-age pensions from the beginning of next year.
A life expectancy coefficient is to be introduced, which the Ministry of Social Affairs and Health is expected to confirm today, Tuesday.
The change means that someone who was born in 1978, who earns EUR 3,000 a month, will have to work two years longer to get the same pension that he or she would have been entitled to without the introduction of the coefficient.
The life expectancy of a Finn born 1978 is an average five years longer than that of a person born in 1948.
The aim of the changes is to balance out the rising costs of pensions as the average age of the population rises, and life expectancy increases, by encouraging employees to stay at work longer.
“The starting point of the reform is that a greater part of the longer life span would be used in working life”, says Marjukka Hietaniemi, of the Finnish Centre for Pensions.
The life expectancy coefficient will not be applied to those born before 1948.
The coefficient will be set separately for each birth year - for the year in which people born in that year reach the age of 62.
If the life expectancy of the age group grows, the coefficient declines automatically, reducing the monthly pension that the person would be entitled to if he or she retires at 62. This can be compensated by working longer.
The impact of the new system will be much less on disability pensions than on old-age pensions; disability pensions will decline by only two euros a month.
The introduction of the life expectancy coefficient is based on the great pension reform of 2005, which was aimed at raising the average retirement age by 2 -3 years.
Helsingin Sanomat
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| 24.11.2009 - TODAY |
 Pension changes set to lead to longer working careers |
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