The premium category model for large employers is being reformed
The premium category model of the employment pension system will see reforms, which will enter into force on 1 January 2024. The changes will affect large employers’ own responsibility component starting in 2025 and the determination of the premium category starting in 2028 (through pension expenditure in 2026).
One of the purposes of the premium category model is to encourage employers to prevent incapacity for work, which will lower the employer’s disability pension premiums. Employers incur costs from disability pensions as a result of the premium category system.
The aim of the reform is to lower the threshold for hiring older people and job-seekers with work capacity challenges, to encourage timely rehabilitation, to improve the functionality and risk equivalence of the premium category model, and to reduce the long delays related to the premium category model between the termination of employment contracts and the payment effects of pensions.
Main changes in the reform:
- Any premium category effect that may arise from persons hired as genuine new employees at the age of 55 or over is eliminated.
- The premium category effect is eliminated when work with a new employer has started as apprenticeship training carried out as vocational rehabilitation or work trial, and the maximum period between the start of vocational rehabilitation and the pension contingency is five years.
- Low-earning employment relationships will not have a premium category effect when the lower earnings limit for funding is raised.
- Rehabilitation benefits that have started a minimum of two years earlier are taken into account as premium category pensions.
- Disability pensions in which more than five years have elapsed between the year of the pension contingency and taking the risk ratio into account in the pension are not taken into account in the calculation of the premium category.
- The deductible of disability pension contribution will gradually decrease to 60% of the current level.
Read more about the reform in the Finnish Pension Alliance Tela release.