How the Finnish pension system works
We invite you to talk about a topic that concerns absolutely all people, regardless of their place of residence, age, place of work and social status. We are talking, of course, about retirement! About what else? After all, sooner or later, we all cross the age line, after which we begin to enjoy benefits in public transport and buy medicines at a discount.
I wonder how all this is happening in Finland, a country that has been leading the ranking of the happiest countries in the world for two years in a row? Are all the inhabitants of the homeland of Santa Claus and Moomins happy with their lives? You will find out the answer below.
Finland is a small country located in the north of Europe, which borders Russia, Norway and Sweden. The population of the country is slightly more than 5 million people, the density is 16 people per square kilometer. Finland has a difficult climate, lacks a large amount of natural resources and a favorable geographical location for foreign trade.
Nevertheless, it was in Suomi (as the locals call their country) that they were able to build one of the most developed systems, which is successfully functioning to this day. One of the main branches of this system are pensions.
As of the end of 2017, the population of Finland was 5,516,224 people. Among them, 1,585,582 pensioners, of which 1,339,991 retired by age. Note that the age of retirement here is 63 years for both sexes. At the same time, the average life expectancy of Finns is 78.8 years for men and 84.2 years for women.
Despite the fact that Finland is rapidly "aging" and growing only due to immigration, the pension system is working properly, and the amount of payments is on average 1,656 euros (about 120 thousand rubles). Below you can see a detailed schedule of the distribution of pensions between men (left) and women (right).
Types of pensions
Now let's talk in more detail about what types of pensions there are in Finland. In total , there are 4 types of them:
Any of the above types of pensions are taxed, and there are several reasons for this. Firstly, in most cases, the pension is paid not by the state, but by the pension fund. Secondly, a pensioner can count on other types of income, including continuing to work. But in this case, it no longer pays pension contributions, but only personal income tax. If he receives a minimum pension (775.27€), the tax percentage will be almost zero, since the income is too small.
In addition, Finnish residents who receive a minimum pension can benefit from various government subsidies, for example, housing benefit, which compensates for part of housing costs (up to 674.75 €).
The total amount of all private and public pension funds in Finland is 202 billion euros. This is several times more than the entire budget of the country — 55 billion. euro. Every year, the state and municipalities that are not included in the state budget spend about 12.5 billion euros on pension payments!
At the end of 2017, the Finnish Pension Administration conducted a study with the participation of 3 thousand pensioners. Half of them said that they are completely satisfied with their lives and even have the opportunity to spend money to help their relatives.
The second half of the respondents complained that they have difficulty paying regular expenses, including medical services and medicines.
Are Finnish pensioners living so well or badly? There is no definite answer to this question. Those who have held high positions and have worked all their lives are really resting on their well—deserved rest, those who are less fortunate are barely making ends meet, especially if they live alone and in rented housing (it is incredibly expensive in Finland).
However, if we compare Finland's pension system with the rest of the world, we can say that it deserves respect. In 2015, the country took 14th place in the GlobalAge Index ranking, which is compiled by the organization HelpAge International is based on the assessment of the well-being of elderly people, which is a pretty good indicator.