Earnings-related pensions were reformed as of 2017

Major changes entered into force at the beginning of 2017, and these changes will affect the earnings-related pensions of both employees and the self-employed. The legislative changes will concern pensions granted and wages paid in or after 2017, and self-employed persons’ earned income insured under YEL. Retirement age limits will rise gradually, pension will accrue equally regardless of age and new types of pension will be introduced.

What is new?

  • The retirement age will gradually rise.
  • Pension accrual will be harmonised.
  • All employees will have the same pension contribution. The pension contribution of self-employed persons will also be harmonised.
  • Pension will accrue from full wages.
  • An increase for deferred retirement will provide an incentive to stay in working life longer.
  • A target retirement age will be determined for each age group.
  • The retirement age will be linked to life expectancy in 2030.
  • Pension can be withdrawn as a partial pension.
  • Persons with a long and strenuous career are eligible for a years-of-service pension.
  • The goal is to lengthen careers and help close the sustainability gap in public finances.

The retirement age will gradually rise

The old-age retirement age will rise gradually beginning in 2018. The new age limits will apply to persons born in or after 1955. The lower age limit for old-age pension will be increased by three months per year until it is 65 years.

The upper age limit for old-age pension will also rise gradually. For persons born in 1955–57, the upper age limit for old-pension is 68 years, 69 years for those born in 1958–61 and 70 years for those born in or after 1962. ​​​


Pension accrual will be harmonised

Pension will accrue on earnings at an annual rate of 1.5 per cent for people of all ages, starting from the age of 17. The lower age limit for self-employed persons is 18.

Pension will accrue on higher earnings than before, as an employee’s pension contribution will no longer be deducted from his or her pay when calculating pension. During the transition period until the end of 2025, pension will accrue for persons between 53 and 62 years of age at a rate of 1.7 per cent on their wages or, in the case of self-employed persons, on their earned income insured under YEL per year.

Same pension contribution

Starting from the age of 17, an employee’s pension contribution percentage will be the same regardless of his or her age. The pension contribution of self-employed persons will also be independent of age. As an exception to this rule, the pension contribution collected from persons between 53 and 62 will be 1.5 percentage unit higher during the transition period, until the end of 2025.

Increment for deferred retirement will encourage longer careers

If a person continues to work after reaching the lower age limit for old-age pension, he or she will benefit from an increase of 0.4 per cent for each month of deferral on his or her pension in addition to the basic accrual.

Target retirement age for each age group

A lower age limit for old-age pension and a later target retirement age will be determined for each age group. After reaching the target retirement age, pension will be paid in full, i.e. in the amount that would have accrued without the reduction resulting from the life expectancy coefficient. The life expectancy coefficient adjusts pensions as life expectancy rises.

Retirement age will be linked to life expectancy

As Finns’ life expectancy rises, the age limit for old-age pension will be linked to its average development. Following this change, each age group born in or after 1965 will have their own retirement ages starting in 2030. The age limit for old-age pension will rise at most by two months per year.

New type of pension: partial early old-age pension

Part-time pension will be replaced by partial early old-age pension. It will make it possible to draw a pension already slightly earlier than the actual old-age pension whether you continue to work or not. In 2017, it will be possible to draw partial early old-age pension at the age of 61 at the earliest. Partial early old-age pension can also be deferred, i.e. drawn after reaching the lower age limit for old-age pension.

Of the accrued pension, 25 or 50 percent can be paid as partial early old-age pension. Partial early old-age pension reduces the final monthly pension by 0.4 per cent per month. Correspondingly, a deferred pension will increase the final pension by 0.4 per cent.

Eligibility for partial early old-age pension will not require terminating your employment relationship or reducing your work input. New pension will accrue from work performed while on partial early old-age pension, and this pension will be paid when applying for old-age pension.

New type of pension: years-of service pension

Individuals with a long career of at least 38 years who have turned 63 may be eligible for a years-of-service pension if their work has been strenuous and wearing.

When applying for the years-of-service pension, the applicant must provide statements issued by the occupational health-care service and the employer on the content of the work or a similar account. The first years-of-service pensions can be granted in 2018.

Pension reform 2017 in a nutshell