Pension reform took place in 2017 which gradually rises retirement age, standardized standardizes pension contributions and pension accrual and introduced introduces new pension options.
This guide goes through what the pension reform contains and how it affects pension accumulation.the changes that concern salary payment.
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What does the pension reform contain
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The most visible changes for employer and employee are the changed pension contribution. You can read more about them below. Pension contribution rates are unified for employees and for entrepreneurs.
Changes that don't affect salary payment
- Pension accrual rates are standardized. Employee's pension accrual will accumulate according to the employee's whole salary. (Does not affect salary payments or salary deductions)
- Retirement age will gradually rise to 65 and will be tied to life expectancy coefficient in 2030. (Does not affect salary payments or salary deductions)
- New pension options are introduced: Pension reform and Pension reformPartial old-age pension and Years-of-service pension.
- An increment for deferred retirement is introduced. Working after the earliest eligibility age for old-age pension increases pension accrual rate.
- A target retirement age will be determined for each age group.
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| Source: http://www.elakeuudistus.fi/ |
Pension contributions
Employee contribution
Contribution rate is the same for everyone from the age of 17. Employee contribution rates change along with the pension reform and they depend on the employee's age. The new pension contribution rates are visible on the table below. The future goal is to unify the contribution rates for everyone and that will be done after the transition period in the year 2025.
Employee’s pension contribution is included in the total contribution. The employer withholds the contribution from employee's salary.
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| The pension reform includes a transition period 2017-2025 and during that period all people aged from 53 to 62 have 1,5 percent higher contribution rate. Also their pension accrual rate is 1,7 % instead of 1,5%. |
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Employee contribution percent | |||||||
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| Age | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 |
| 17–52 years | 7,15 % | 7,15 % | 7,15 % | 6,75 % | 6,35 % | 6,15 % | 5,70 % |
| 53–62 years | 8,65 % | 8,65 % | 8,65 % | 8,25 % | 7,85 % | 7,65 % | 7,20 % |
| 63–67 years | 7,15 % | 7,15 % | 7,15 % | 6,75 % | 6,35 % | 6,15 % | 7,20 % |
Contribution as an entrepreneur
The YEL insurance payments are standardized so that it will be the same for everyone changed also. The new YEL insurance rates are visible on the table below. The future goal is to unify the YEL payment rates for everyone and that will be done after the transition period in the year 2025.
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| The pension reform includes a transition period 2017-2025 and during that period all people aged from 53 to 62 have 1,5 percent higher contribution rate. Also their pension accrual rate is 1,7 % instead of 1,5%. |
| YEL payment percentages | |||||||
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| Age | |||||||
| 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | |
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| 18–52 years | 24,10 % | 24,10 % | 24,10 % | 24,10 % | 24,10 % | 24,10 % | 23,60 % |
| 53–62 years | 25,60 % | 25,60 % | 25,60 % | 25,60 % | 25,60 % | 25,60 % | 25,10 % |
63–67 years | 24,10 % | 24,10 % | 24,10 % | 24,10 % | 24,10 % | 24,10 % | 25,10 % |
| Starting entrepreneur (22 % reduction) | |||||||
| 18–52 years | 18,80 % | 18,80 % | 18,80 % | 18,80 % | 18,80 % | 18,80 % | 18,408 % |
| 53–62 years | 19,97 % | 19,97 % | 19,97 % | 19,97 % | 19,97 % | 19,97 % | 19,578 % |
| 63–67 years | 18,80 % | 18,80 % | |||||
Pension accrual
Retirement age
New pension options
Partial old-age pension
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| 18,80 % | 18,80 % | 18,80 % | 18,80 % | 19,578% |