Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

The earnings-related pension a part of social insurance

606 views

Published on

Published in: Business, Economy & Finance
  • Be the first to comment

The earnings-related pension a part of social insurance

  1. 1. The earnings-related pension a part of social insurance Taina Hedman 7.9.2013
  2. 2. earning-related pension that accrues from work Finnish Centre for Pensions2  Central body for the earnings-related pension scheme over 50 years in Finland  Provides services common to the decentralised earnings-related pension scheme  Carries out research, collects statistics, follow-up of reforms, keeps register over employment relationships  House who knows pensions
  3. 3. Finnish Centre for Pensions 3 Health insurance Accident insurance National pension Guarantee pension Pension insurance Other (e.g. voluntary supplementary pensions) Unemployment insurance Employees’ group life insurance Earnings-related pension Social Insurance
  4. 4. • Earnings-related pension – Secures a reasonable consumption level after retirement – Right to pension earned through work – Benefit paid by earnings- related pension institutions – No pension ceiling Finnish Statutory Pension Provision • National pension and guarantee pension – Secures a minimum level of income – Supplements a small earnings-related pension – Amount depends on time of residence in Finland and family relations – Benefit paid by the Social Insurance Institution of Finland (Kela) Total pension = Guarantee pension + National pension + Earnings-related pension
  5. 5. Total pension in 2013 0 250 500 750 1000 1250 1500 1750 0 500 1000 1500 2000 2500 3000 3500 Pension EUR/month Wage EUR/month Guarantee pension National pension Earnings-related pension Net
  6. 6. Earnings-related pension accrues from working! The Finnish Centre for Pensions6  The earnings-related pension is a central part of Finnish social security.  The earnings-related pension ensures that employees and the self-employed can maintain their standard of living after retirement.  The longer your working career, the better your pension!  The residence-based national pension and the guarantee pension secure a minimum income.  Together, the earnings-related and the national pension ensure the wellbeing in case of disability and old age.
  7. 7. Earnings-related pension Contributions Finnish Centre for Pensions7  Employers and employees pay their share of the pension contribution  Employer withholds employee’s share of the contribution from wages and pays the entire contribution to the pension provider  Earnings-related pension contributions are fully deductible in the taxation for employees
  8. 8. Earnings-related pension Contributions Finnish Centre for Pensions8  Contribution percentages are affirmed annually by the Ministry of Social Affairs and Health Employer with insurance contract 23.4% when payroll < EUR 1,879,500 Contribution category model when payroll > EUR 1,879,500 Occasional employer 23.8% Employee’s share 5.15% < 53 yrs 6,50% ≥ 53 yrs
  9. 9. Determining the Earnings-related Pension Finnish Centre for Pensions9  Old-age pension accrues as of age 18  Pension accrual rates: 18–52 yrs: 1.5% 53–62 yrs: 1.9% 63–67 yrs: 4.5%  Also on the basis of social benefits determined by law, for periods of home care of child under the age of three and for periods of study  Earnings adjusted by wage coefficient in line with the level at the start of the pension  Proportioned to life expectancy by means of life expectancy coefficient Earnings- related pension = annual earnings X accrual rate
  10. 10. When and on which pension? The Finnish Centre for Pensions • Retirement due to illness at age 18 – 62 – Vocational rehabilitation (for those in working life) – Cash rehabilitation benefit – Disability pension • Flexibly on old-age pension according to own choice at age 63-68. • An elderly employee or self-employed person may reduce his or her workload by retiring on a part-time pension. • Survivors’ pension secures the income of the surviving spouse and children if the family’s breadwinner dies
  11. 11. How Pension Accrues • Pension accrues from all wages earned between the ages of 18 – 68 years • Pensions accrues also for studies and for staying at home with one’s own child under the age of 3 • Working abroad: according to the rules of the country of employment Illustration: Anssi Keränen ANNUAL EARNINGS X ACCRUAL RATE
  12. 12. Funding of Earnings-related Pensions • Everyone is first a payer, then a receiver • Part of the contribution is funded for future generations Illustration: Anssi Keränen Pension recipient EUR 20.5 bn + public sector Employee Employer / Self-employed EUR 21.5 bn Earnings-related pension insurer EUR 155 bn
  13. 13. Is There Enough Money? • The number of retired persons grows and people live longer • Working lives have to be extended to maintain a reasonable contribution level • Returns on earnings-related pension funds are of great significance Illustration: Anssi Keränen OLD-AGE DEPENDENCY RATIO OLD-AGE DEPENDENCY RATIO
  14. 14. Check How Much Pension You Have Earned! • You can access your Pension Record online (only in Finnish and Swedish) at ww.tyoelake.fi or receive a printed record to your home address every third year Illustration: Anssi Keränen
  15. 15. Sources of Information • www.tyoelake.fi • www.keva.fi • www.kela.fi • Finnish Centre for Pensions customer information 029 411 2801 switchboard 029 411 20 e-mail firstname.lastname@etk.fi visiting address Kirjurinkatu 3 postal address FI-00065 ELÄKETURVAKESKUS Finland Eläketurvakeskus 15

×