The Finnish way

Whereas the struggle for a higher retirement age is continuing in France even though the pension reforms have come into force, early retirement has been largely abolished in the far north and the retirement age for old-age pensions has been linked to life expectancy. There were no French-style street fights – on the contrary, the Finns continue to be the happiest people on earth, even though they are supposed to work longer.

Finland’s starting position is comparable to many other European countries

Many European countries are familiar with the problem of the increasing inverted age pyramid, i.e. the relationship between old-age pensioners and employed workers is changing to the detriment of the contributors. Finland is no exception and is currently even more affected than Germany, as the OECD figures show. Like Germany, the birth rate in Finland is low; however, unlike in Germany, immigration is also at a low level.

The Finnish way

The Finnish government reacted to these unfavourable signs very early on. It launched pension reforms in 2005 and 2017 that are already showing positive results. It has taken some unpopular measures, but they did not cause a storm of indignation amongst the population.

The Finnish pension system consists of a national pension system and an employee pension system. The national insurance system provides all residents with a basic pension that does not depend on their employment. Almost all of the country’s entire employed population is covered by the employees' insurance system that runs in parallel to the residents' insurance.

The early old-age pension and the pension from unemployment were largely abolished or replaced by early partial old-age pensions in both systems.

Furthermore, the retirement age was linked to life expectancy in both systems back in 2017. Moreover, those whose pension from the employee pension scheme is more than 1,500 euros/month  are not entitled to claim a national pension because both benefits are considered to be a total benefit.

On the right path

The reforms seem to be working as more and more people are staying longer in the workforce, especially low-skilled workers. The key to realising this objective is improving and continuing advanced training and employee qualifications, which is also in keeping with Principle 1 of the European Pillar of Social Rights (ESSR). Furthermore, effective early education as well as good childcare are also important aspects here. These aspects were also confirmed by an expert group (high-level group) set up by the European Comission as part of their ESSR Action Plan.

All of this is flanked by flexible working time arrangements, so that older employees in particular can remain in work longer and they can also take care of other family members whenever necessary.