Earnings-related pension is accrued from wages/salaries paid for work. The longer you work, the higher a pension you will receive. Additionally, any work done after the lowest pensionable age is rewarded with an increment for the deferred retirement.
Pension is also accrued from work carried out alongside the pension, work abroad and different unsalaried periods, such as a period during which you received a sickness allowance. The life expectancy coefficient, on the other hand, will have a reducing effect on the amount of pensions. You can get an estimate of your future pension from Elo’s Online Service.
Factors that affect the pension amount
Employees accrue earnings-related pension from annual earnings starting at the age of 17. For self-employed persons, the earnings-related pension begins to accrue on the basis of the YEL income from the age of 18. The effect of any flexible contributions will also be taken into account in the YEL income amount.
Pension accrues from annual earnings or YEL income at a rate of 1.5% per year. However, the accrual rate for those aged 53–62 is 1.7% during the years 2017–2025). The maximum age for pension accrual depends upon the individual’s year of birth:
- 68 for those born in or before 1957,
- 69 for those born between 1958−1961, and
- 70 for those born in or after 1962.
Working beyond the lowest pensionable age pays off
If you wish, you can continue working beyond your lowest pensionable age and accrue a larger old-age pension for yourself. In this case, an increment for the deferred retirement is added to the accrued pension, thereby permanently increasing the pension by 0.4% for every month that exceeds the lowest pensionable age. If, for example, you delay your retirement on old-age pension by one year, your accrued pension will be permanently increased by 4.8%. Additionally, pension will accrue from the additional 12 months of work at a rate of 1.5% of annual earnings or YEL income.
Earnings-related pension also accrues for work done during retirement
Pension is accrued from work done alongside pension at a rate of 1.5% of the annual earnings, regardless of age. This does not, however, concern those receiving part-time pension or partial early old-age pension; in these cases, pension accrues in accordance with age-related accrual percentages.
Pension accrual prior to the year 2017
For the years 2005–2016, pension accrued from the annual earnings at the following rates:
- 1.5% for those aged 18–52 years,
- 1.9% for those aged 53–62 years,
- 4.5% for those aged 63–67 years.
Prior to 2005, pension accrued from the annual earnings at the following rates:
- 1.5% before reaching the age of 60,
- 2.5% from the age of 60 onwards.
Pension accrued from the age of 23. The previously valid age limits will continue to affect many pensions for a long time yet, since the earnings-related pension legislation does not affect pensions retroactively.
As of 2005, pension also accrues from certain unsalaried periods, such as periods of unemployment or child care, study and sick leaves. The pension accrual rate for these periods is 1.5% of the annual earnings. The earnings used for the calculation of the daily allowance serve as the basis for pension accrual. The following shows the percentage of your earnings that is taken into consideration in different situations:
- 75% for periods of unemployment,
- 65% for periods of sick leave,
- 55% for periods of job alternation leave (75% for 2005−2009),
- 117% for maternity, paternity and parental benefits,
- 65% of the compensation for loss of earnings under accident and motor liability insurance.
During periods of child care leave for a child under the age of three and studies, pension is based on a fixed income of 815,78 euros per month (in 2023). Pension accrual during a period of unemployment ends when the individual reaches the lowest pensionable age for the relevant age group. Other benefits may accrue pension up until the age of 68, if the individual has not yet retired.
No pension is accrued for the basic unemployment allowance or labour market subsidy paid by Kela in accordance with the Act on Income Security for the Unemployed (1290/2002). In order to accrue pension from the unsalaried periods, the individual must have an employment history with sufficient earnings in addition to the unsalaried benefits. If old-age, disability or unemployment pension is already being paid, no further pension will accrue for any unsalaried periods.
When working abroad, one generally falls within the social security sphere of the country of employment. The social insurance contributions are paid to the country in question. Benefits and pensions are also determined in accordance with the legislation valid in the country of employment. This rule is generally observed regardless of the home country or nationality of the employer, employee or self-employed person.
An employee who is posted temporarily to an EU or EEA country, Great Britain, Switzerland or other country with which Finland has a social security agreement may continue to accrue pension in Finland. When working abroad, the employee must have an A1 certificate for posted workers, which can be applied for from the Finnish Centre for Pensions.
If the country to which the employee is posted is a non-agreement country, the pension will accrue in Finland. In this case, however, the pension insurance contributions may also need to be paid to the country of employment.
When employed by a foreign employer, the pension usually accrues to the pension system of the country in which the work is carried out in accordance with the regulations of the country in question. Further information about pension accrued while working abroad www.etk.fi.
People are living longer on average than ever before. This means that in the future, pensions will need to be paid for a longer period on average. The life expectancy coefficient is a tool for adapting the future monthly pensions to accommodate for a longer potential lifespan. As the average life expectancy increases, the life expectancy coefficient confirmed by the Ministry of Social Affairs and Health will correspondingly reduce the amount of monthly old-age and disability pensions. The life expectancy coefficient has had an impact on pensions since 2010.
The longer you opt to remain in working life, the higher a pension you will accrue for yourself. Even if you work longer, however, you cannot totally eliminate the effect of the life expectancy coefficient. In other words, the life expectancy coefficient will have an impact on your future pension regardless of the additional work done.
Life expectancy coefficient and old-age pension
You can choose to retire on old-age pension at any point after you have reached your lowest pensionable age. A life expectancy coefficient based on your year of birth will be applied to your pension. To some extent, you can counter the impact of the life expectancy coefficient by choosing to remain longer in working life.
Life expectancy coefficient and disability pension
Not everyone is able to extend their working life due to, for example, health reasons. For this reason, the life expectancy coefficient is only applicable to the accrued portion of the disability pension, not the related projected pension component. Also, the life expectancy coefficient confirmed for the year when the person’s incapacity to work began is applied instead of the coefficient based on the person’s year of birth. By doing so, the impact will be less severe on the person’s future pension.
The statutory pension scheme in Finland is comprised of earnings-related pension, national pension and guarantee pension. Any earnings-related pension accrued from your work forms the foundation of your pension security. If your earnings-related pension is minimal, you can also apply for the national pension paid by Kela. You are eligible for the national pension if the amount of your earnings-related pension does not exceed about 1 200–1 400 euro per month depending on your family situation. The national pension cannot be paid as partial early old-age pension or disability pension. On the other hand, the guarantee pension is paid by Kela as a means of securing the minimum pension.
You can apply for the national pension and guarantee pension using the same application form as for earnings-related pension. Kela will issue the decision regarding these pensions. Kela also provides additional information about the national and guarantee pensions and the impact of the earnings-related pension on the amount of the guarantee pension and other benefits paid by Kela.
The statutory pension security can also be supplemented with voluntary supplementary insurance. The supplementary insurance can be taken either independently or by an employer on behalf of its employees.
Pension amount in different life situations
Your old-age pension is the amount of pension that has accrued by the time you retire, reduced by the impact of the life expectancy coefficient.
Get an estimate of the old-age pension amount from Elo’s Online Service >
If you continue to work longer, you can earn a larger pension amount for yourself. If you continue to work beyond the lowest pensionable age for old-age pension, your final pension will be increased by an increment for deferred retirement. This increment will increase the accrued pension by 0.4% for each month that the retirement is deferred beyond the lowest pensionable age for old-age pension. Additionally, pension will accrue from the continued work at a rate of 1.5% annually.
If your earnings-related pension amount falls below the minimum amount, you will also receive a supplementary national pension. In addition to the earnings-related pension, you can apply for the national pension if the amount of your earnings-related pension does not exceed about 1 200–1 400 euro per month, depending on your family situation. You can apply for the national pension and guarantee pension using the same application form as for earnings-related pension. Kela makes the decisions concerning the national pension and provides additional information about this pension type.
You can decide to withdraw either 25% or 50% of the pension accrued by the end of the preceding year as partial early old-age pension. If you initially opt to take only 25% as the partial early old-age pension, you can apply for payment of the other 25% of the accrued pension at a later date. This change is not possible the other way around.
You can get an estimate of your partial early old-age pension and subsequent old-age pension amount from Elo’s Online Service. Please note that partial early old-age pension will always reduce your final old-age pension amount in comparison to that which you would receive if you opted to work full-time up until you retired on old-age pension without taking partial early old-age pension. The Online Service also enables you to get an estimate of the impact of the partial early old-age pension on your final old-age pension amount.
The amount of the pension will be adjusted by the life expectancy coefficient. The partial early old-age pension is not paid as a national pension from Kela.
Partial early old-age pension prior to the lowest pensionable age for old-age pension
If you opt to take partial early old-age pension prior to reaching your lowest pensionable age for old-age pension, the pension payment will be reduced by 4% for each month short of your pensionable age for old-age pension. This reduction will have a permanent effect on your final old-age pension as well.
Partial early old-age pension after the lowest pensionable age for old-age pension
If you opt to take partial early old-age pension after you have reached the lowest pensionable age for old-age pension, the pension payments will not be affected by any reduction for early retirement. In this case, you will receive an increase for the deferred retirement, which amounts to 0.4% for each month that exceeds your lowest pensionable age. However, the period that qualifies for the deferment have not been earlier than 1 January 2017.
The projected pension accrues at a rate of 1.5% per year from the start of the year when your incapacity to work began until you reach the pensionable age for old-age pension. Pension accrues from the earnings that are equivalent to the average of your earnings or YEL income during the five years preceding the date on which your incapacity to work began. The earnings or reported YEL income received during the year in which your incapacity to work began are not taken into account.
For those who are granted disability pension as a young person, the pension will be raised with a one-off increase five years after the commencement of the pension. The amount of the increase depends on the age of the pension recipient.
The amount of partial disability pension is half of the amount of full disability pension.
Get an estimate of disability pension from Elo’s Online Service >
In addition to the full disability pension and rehabilitation subsidy, you can apply for the national pension if the amount of your earnings-related pension does not exceed about 1 200–1 400 euro per month depending on your family situation. Recipients of partial disability pension are not eligible for the national pension from Kela.
A rehabilitation allowance is generally paid for any period in which active vocational rehabilitation measures are being conducted.
Get an estimate of the rehabilitation allowance from Elo’s Online Service >
The amount of the rehabilitation allowance is the calculated disability pension increased by 33%. If you are receiving a rehabilitation subsidy (fixed-term disability pension) when you begin rehabilitation, you will be paid the rehabilitation increase on top of your rehabilitation subsidy.
In addition to the rehabilitation allowance, you will receive compensation during the rehabilitation period for any rehabilitation-related costs, such as travel expenses. Further information is available from TELA’s recommendations for reimbursements (in Finnish or Swedish only)
The basis for the survivors’ pension is the pension that the deceased individual was receiving or would have received as disability pension at the time of death. The survivors’ pension is determined based on the number of beneficiaries. The total of the spouse’s and orphan’s pensions together cannot exceed the amount of the deceased person’s pension. The distribution of the survivors’ pension changes as the number of beneficiaries changes, for example, when a child turns 18.
The amount of the survivors’ pension as a percentage of the deceased individual’s pension:
|Number of children||Widow(er)´s share %||Children´s %|
|4 tai enemmän||17||83|
When calculating the amount of the spouse’s pension, the widow(er)’s own earnings-related pension is taken into consideration if the widow(er) is the sole beneficiary. Known as the pension reduction, this means that the surviving spouse’s own pension has a reducing effect on the pension paid after the deceased person. If a widow(er) is not yet receiving an earnings-related pension, the calculated disability pension as would be payable to the widow(er) serves as the basis for the reduction.
Get an estimate of spouse's pension >
If the widow(er) is already receiving an earnings-related pension, the reduction is made immediately when the payment of the spouse’s pension begins. If the widow(er) is not yet retired, the reduction is made within six months of the start of the spouse’s pension. The reduction is not made, however, until the youngest child listed as a beneficiary turns 18.
No reduction is made to the amount of the spouse’s pension if the widow(er)’s own earnings-related pension does not exceed the limit specified by law, which is currently 779,00 euro per month. In this case, the amount of the spouse’s pension is half of the deceased person’s pension. If the widow(er)’s own earnings-related pension is greater than 779,00 euro per month, the spouse’s pension will be reduced by half of the amount that exceeds the limit.
The reduction can also be done on the basis of the widow(er)'s actual income if it is fundamentally lower than the calculated earnings-related pension. This requires a separate application. A reduction based on the actual income will remain effective until the widow(er)’s circumstances change.Example of the amount of the spouse’s pension
The pension of the deceased person was 1,200 euro per month. The spouse’s pension, before the pension reduction, is half of that, i.e. 600 euro per month. If the widow(er)’s own pension is 1,000 euro per month, this exceeds the pension reduction limit of 779,00 euro by 221,00 euro. Half of this amount, i.e. 110,50 euro, is reduced from the spouse’s pension. Therefore, the spouse’s pension, after the pension reduction (600 euro - 110,50 euro) is 489,50 euro per month.
The amount of career pension is equivalent to the amount of pension accrued by the date of retirement. Unlike disability pension, the amount of career pension does not contain any projected pension component.
You can check the amount of your accrued earnings-related pension from the pension record.
Check your pension record in Elo’s Online Service >
You can also request an estimate of the career pension amount from Elo's Pension Services. You can reach us by phone +358 (0)20 694 717.