Retiring on old-age pension in different life situations
If you are unemployed, the unemployment security system provides you with subsistence. If you are a member of an unemployment fund, you are eligible for an earnings-related unemployment allowance from the fund. If you are not a member of a fund, you may apply for the Basic Unemployment Allowance from Kela. If you are not entitled to receive an unemployment allowance, you may be eligible for a labour market subsidy from Kela. Unemployment security is paid up until the age of 65, after which you can only receive unemployment security during a lay-off period.
The unemployment allowance is paid for a maximum of 500 days. However, a continued unemployment allowance can be paid to an employee who:
- has been employed in work that entitles one to a pension for a minimum of five years during the preceding 20 years;
- was born in 1955–1956 and turned 60 before the maximum period of 500 days for an unemployment allowance expires or
- was born in or after 1957 and turns 61 before the maximum period of 500 days for an unemployment allowance expires.
You can check your right to an unemployment allowance and the amount thereof from your unemployment fund. You can also get information about unemployment security from Kela or the Federation of Unemployment Funds (TYJ).
Pension is accrued from the unemployment allowance up until the lowest pensionable age.
An unemployed employee’s right to old-age pension
You are eligible to receive old-age pension from the age of 62 if you are, at that point, receiving a continued unemployment allowance and you were born prior to the year 1958. Pension begins, at the earliest from the start of the month following the end of the maximum period of 500 days, even if your 62nd birthday is earlier than this date. The payable old-age pension is the amount of the pension accrued without any reduction for early retirement.
If you reach your lowest pensionable age before the maximum period for an unemployment allowance ends, you can either take the old-age pension at the lowest pensionable age or continue receiving the unemployment allowance up until, for example, the age of 65 and then apply for old-age pension.
If you are not eligible to receive a continued unemployment allowance, you can apply for old-age pension at your lowest pensionable age.
An unemployed self-employed person’s right to old-age pension
Self-employed persons can retire on old-age pension, at the earliest, upon reaching their lowest pensionable age. Self-employed persons are not eligible for a continued unemployment allowance and do not, therefore, have the possibility to retire, on the basis of the continued period, before reaching their lowest pensionable age.
You do not need to apply separately for old-age pension once your disability pension ends, because the pension will automatically be converted to an old-age pension. Depending on when the disability pension was granted, your disability pension will convert to old-age pension:
- At your lowest pensionable age, if your work disability began in 2017 or later
- At 63, if your work disability began during the years 2006– 2016
- At 65, if your disability began in 2005 or earlier.
If you have been working alongside your pension, any pension accrued from that work must be applied for separately. If your work has ended, you can complete an application once your disability pension changes into old-age pension. If your work is still continuing, you can apply for the payment of the pension once the work ends. Since 2005, additional pension has accrued for any work done alongside pension. Pension accrues up until the highest pensionable age.
If you have retired on partial early old-age pension, you can shift to old-age pension once you reach your lowest pensionable age. In this case, the employment relationship must end, but entrepreneurial activities can continue, albeit without the obligation to take YEL insurance. You must separately apply for old-age pension.
Statutory pension security can be supplemented with voluntary supplementary insurance taken either independently or by your employer.
If the supplementary insurance taken by an employer has a lowered pensionable age, the employee will also be eligible for the statutory old-age pension at the lowered pensionable age. In these situations, you can request an estimate of your earnings-related pension amount from Elo’s Pension Services.
Further information about voluntary supplementary pension is available from the pension company providing the supplementary pension or from your employer.
In additional to your earnings-related pension, you can also receive a national pension from Kela as old-age pension if the amount of your earnings-related pension falls below 1,157.71–1,299.88 euro per month, depending on your family situation. It is important to remember, however, that the national pension has its own age limitations for old-age pension.
In accordance with the national pension rules, one is not eligible for old-age pension until the age of 65. If you are eligible for a national pension, you can opt to apply for it already prior to the age of 65 as an early pension. The age limit for early national pension is 63 years. The age limit rises to 64 years for those born between 1958–1961.
The early national pension will permanently reduce the amount of the final pension. The reduction for early retirement is 0.4% for each month short of the standard pensionable age. If you do not apply for a national pension until the age of 65, this reduction is not applicable.
If you are applying for old-age pension comprised of both an earnings-related pension and a national pension, you can apply using the same application form available from Elo's Online Service. Further information about the national pension is available from Kela.