According to data from the Finnish Pension Center (ETK) and Kela, the average monthly pension of Finns, recognized as the happiest people in the world, increased to 1,977 euros in 2023 from 1,845 euros in the previous year.

The country spends around €38 billion annually on pensions, with pensioners making up 33% of Finland’s population over 16 years of age. In 72 municipalities, more than half of the population are pensioners.

In Finland, the right to social security mainly depends on the place of residence in the country. When a person starts

works or starts a business in Finland, he (the person) must contribute to the Finnish social security system and thus be entitled to assistance. The percentage of an employee’s gross salary representing a contribution to the social insurance system is 7%.

There are two pension systems in Finland: performance-based pension (work pension) and national pension. Their purpose is to guarantee Finnish citizens a pension in the event of old age and incapacity, as well as in the event of the death of the breadwinner. In addition, if the employee is unable to return to work for a long period of time due to a long-term illness, the person concerned may receive a disability pension.

The central body of the work-related pension system is the Central Pension Insurance Institute; the highest body in this field is the Ministry of Social Affairs and Health Protection. Pension management in the private sector is delegated to private pension companies, pension trusts and pension funds.

The pension applies to all employees and self-employed workers. The size of the pension depends on the length of service and salary. Pensions received from work are: old-age, disability, unemployment and survivor’s pension, plus early retirement pension and partial pension.

The pension contribution is paid by both the employer and the employee. A self-employed person will pay the insurance on his own behalf. People who do not receive a pension from work, or whose pension from work is small, receive a minimum pension in the form of a national pension.

The retirement age for the state pension is 65, but it can be assigned earlier to a person aged 60-64.

The share of Finns receiving a disability pension has fallen to around 5% in 2023 from 7% 10 years ago.

“Large pensions are still rare,” commented ETK statistical planner Yoonas Gautamäki.

“In 2023, for example, about 2% of pensioners received a monthly pension of more than 5,000 euros in 2023. Most were men.”

Of the nearly €38 billion in pension costs in 2023, €34.1 billion was income-related pensions, while Kela paid out nearly €2.6 billion in national and guaranteed pensions.

The majority (90 percent) of pensions were paid in the form of old-age pensions.

The central body of the work-related pension system is the Central Pension Insurance Institute; the highest body in this field is the Ministry of Social Affairs and Health Protection. Pension management in the private sector is delegated to private pension companies, pension trusts and pension funds.

The most generous states regarding pensions

Data from the OECD’s Pensions Report shows that the most generous countries with pensions (as a ratio of received pension to pre-retirement salary) are: India (99%), Portugal (95%) and Italy (93%)

At the other end of the scale, British pensioners receive just 29% of their salary when they retire. In the United States, pensions make up 49% of wages, while in China, home to more than 1.4 billion people, the figure is 83%, according to OECD data.

“Global time bomb”

However, while most of these figures seem generous, they hide very serious concerns. Improvements in health care in developed and most developing countries are forcing people to live longer and, therefore, to receive more years of retirement than the system “plans”.

According to the World Bank, pensioners in the six countries with the largest pension systems live 8-11 years longer, and in Japan – 16 years longer.

These pension systems in the US, UK, Japan, the Netherlands, Canada and Australia have been called a “global time bomb” in the latest report by the World Economic Forum.

That’s because these systems are projected to create a total deficit of $224 trillion by 2050, “putting the incomes of future generations at risk and creating the industrialized world’s biggest pension crisis in history,” the report said. in connection with this.

If you add China and India to the statistics, the deficit will reach 400 trillion dollars, which is about five times the size of the current world economy.