The Finnish pension system
Finland has two pension systems which complement each other:
- Earnings-related pension is earned by your paid work and entrepreneurial activities. It is the responsibility of an employer to take out a retirement pension insurance policy for all their employees and to pay the insurance premiums. An entrepreneur takes care of their own insurance premiums.
- National pensions and guarantee pensions are meant for those pensioners who have no earnings-related pension or whose pension is very small.
Both pension systems include old-age pension and disability pension. You will be eligible to receive a national pension once you have turned 65. The age at which you can receive earnings-related pension depends on your year of birth. Check your pension age in your pension record or with your pension institution. A person who is incapable of work may receive disability pension before their old-age pension begins.
A pensioner can also work, if he/she so chooses to do. If you are on old-age pension, your earned income will not have an effect on the amount of pension you receive.
In Finland pensions are taxable income.
Employers and employees finance earnings-related pension cover together. The employer collects their employees’ contribution from their pay and renders this and their own share of the insurance fee to the pension institution. Authorised pension providers, pension funds and foundations take care of earnings-related pensions.
The amount of earnings-related pension depends on how long you have worked and how high your salary has been. Earnings-related pension companies, pension funds and pension foundations manage earning-related pensions. The Finnish Centre for Pensions (ETK) takes care of issues related to pension security in a centralised manner.
Check your accumulated pension from your pension record
Your pension institution will send you a pension record at regular intervals. The record presents an estimate of how much pension you have accumulated. You can also order a pension record from your pension institution or the Finnish Centre for Pensions.
Keep an eye on the accumulated pension in your pension record to ensure that it has been calculated correctly. If there is an error in the information, contact your pension institution or the Finnish Centre for Pensions. Keep any testimonials of service for verification. Payslips should also be kept.
National pension and guarantee pension
You can apply for national pension if you have not accumulated earnings-related pension or if it is very small.The amount of national pension is affected by how long you have lived or worked in Finland. In addition to this, your family situation and other continuous pension income affect the amount of national pension paid. Kela handles national pensions and guarantee pensions.
You can apply for national pension and guarantee pension if you are covered by Finnish social security and have resided in Finland for at least 3 years since you turned 16. The time you have lived in another EU or EEC country may also be partially considered.
Guarantee pension provides pensioners with minimum livelihood. The amount of guarantee pension you will receive is the difference between the other pensions you might receive and the full guarantee pension. If the sum total of your other pensions is more that the full guarantee pension, you are not eligible for guarantee pension. More information on guarantee pension is available at Kela.
In some cases, you can also receive a national pension before turning 65. More information on early national pension and additional days related to national pension can be obtained from Kela.
Applying for a pension
All pensions must be applied for. You can apply for earnings-related and national pension with the same application form. You can fill in the form online or deliver it to any Kela office, the service point of an authorised pension provider or to the Finnish Centre for Pensions. Application forms are available in the service points and on the websites of the same.
You can apply for guarantee pension using the online service of Kela or by visiting a Kela office. You can also apply for old-age pension and guarantee pension by calling Kela. Kela’s customer service number for pension matters is 020 692 202.
Pension from abroad
If you have resided or worked in other EU countries or in countries with which Finland has a social security agreement, you might be eligible to receive pension from these countries. You can apply for pension from these countries at the same time as you apply for Finnish earnings-related or national pension. Attach to your application a separate form Residence and Employment Abroad. You can print the form at the website of Kela or the Finnish Centre for Pensions.
If you have worked in a country with which Finland does not have a social security agreement, you must find out for yourself if you are eligible to receive pension from that country. If you are entitled to receive pension, you must apply for it yourself.
The Finnish Centre for Pension will give you advice for applying for pension abroad. Read more on the website of the Finnish Centre for Pension. You can also ask for advice at Kela.
Paying pension abroad
Earnings-related pension paid abroad
If you leave Finland, you will be paid earnings-related pension accrued in Finland when you reach retirement age. Earnings-related pension can be paid to any country. It is important that you have a testimonial of service for each contract of employment you have had in Finland. Payslips should also be kept
The way in which you should apply for pension to be paid abroad depends on your country of residence. You can contact your pension institution or the Finnish Centre for Pensions for advice. Before applying for pension, request a pension record from your pension institution or the Finnish Centre for Pensions. The pension record indicates how much pension you have accumulated in Finland.
Kela pensions paid abroad
Always notify Kela if you move abroad permanently or reside in a foreign country for more than three months.
If your residence abroad is temporary, i.e. less than one year, Kela will usually continue to pay your pension normally. In some cases Kela may continue to pay for example old-age and family pension to some countries even if you move there for more than a year. These countries include for example other EU and EEA member states and some of the countries with which Finland has a social security agreement.
Guarantee pension will not be paid if you move abroad for more than a year.
Kela website contains further information on incidences when you can receive Kela pensions abroad. You can also ask about your situation at a Kela office or telephone service.
Partial early old-age pension
If you have turned 61, you can enter partial retirement before your minimum old-age pension age. This arrangement is called partial early old-age pension. You can choose whether to receive 25% of 50% of your monthly earning-related pension amount. If you wish, you can continue working full-time or agree upon shorter working hours with your employer. You can also stop working altogether. Please note that the partial early old-age pension will permanently reduce the ultimate amount of your old-age pension. Ask your pension institution for more information.
If you are ill for a long time, you will normally receive sickness allowance for about a year. If you cannot return to work due to an illness or injury, you can apply for disability pension (työkyvyttömyyseläke) or rehabilitation subsidy ( kuntoutustuki). Rehabilitation subsidy is a fixed-term disability pension. Apply for disability pension with a form available from Kela. You must attach medical certificate B to your application. Kela and your authorised pension provider will evaluate whether you are fit for work and whether you would benefit from rehabilitation. Further information on disability pension and rehabilitation subsidy is available from Kela, your pension institution or from your occupational health care provider.
If you are on disability pension, your earned income will affect the amount of pension you receive. Notify Kela and your authorised pension provider if you go to work. If your earned income per month is sufficiently large, you can let your pension lie. This means that you can take a break from collecting your pension. The break can be at least three months and at most two years long. You will not lose your right to receive disability pension during the time that you let your pension lie.
Other benefits for pensioners
In addition to pension, Kela may pay pensioners with low income housing allowance for pensioners. More information on housing allowance for pensioners is available on the Kela website.
Kela may pay care allowance for pensioners for individuals with long-term illness or disabled people. Ask for more information at Kela.
Discounts for pensioners
After you have retired, you can receive pensioner discounts, for example, for train, plane and bus fares in Finland. Persons of 65 years old or over receive a discount on a travel fare by presenting their identity card. A pensioner under 65 years of age can receive discounts by presenting their identity card and earnings-related pension card or national pension card. Check the conditions of pensioner discounts from a ticket office.
You can also receive pensioner discounts, for example, for recreational sports and cultural activities.