Between 2018 and 2023, 459 people retired on Finland’s years-of-service pension, highlighting the narrow reach of the scheme since its 2017 introduction, research from the Finnish Centre for Pension (ETK) has found.

The year-of-service pension, introduced as part of Finland’s 2017 pension reform, appears to work as intended, providing early retirement benefits for individuals who have spent long careers in physically demanding jobs.

The years-of-service pension allows people to retire at age 63, earlier than the general retirement age, if they worked at least 38 years in a physically arduous job and their ability to work has deteriorated.

The research found years-of-service pensioners have an average working life of 44 years at the age of 63 and have been exposed to physical stress during their working life.

It also revealed that years-of-service pensioners differ from those on other early retirement routes, such as disability pension recipients or those who have taken a partial old-age pension.

Commenting on this, ETK senior researcher, Aart-Jan Riekhoff, said: “Years-of-service pensioners have worked in positions where they have been exposed to heavy physical stress, which may cause growing health problems and difficulties in performing at work near the retirement age.

“Those on disability pensions, on the other hand, often have health problems several years before retirement, which is less common for the years-of-service pensioners.”

Over 90 per cent of Finland’s years-of-service pension recipients are men, a much higher proportion than in any other early retirement routes.

In addition to this, years-of-service pensioners are relatively low educated, with less than 4 per cent of them holding university degrees. Those receiving a years-of-service pension also had longer working lives than other groups.

The study found that the most common underlying cause for being granted a years-of-service pension was musculoskeletal diseases, with nearly three in four of those retired on a years-of-service pension diagnosed with this.

Meanwhile, those diagnosed with cardiovascular disease or poor mental health have had very few years-of-service pension granted to them.

Many applications for this pension type were rejected as the job in question was not deemed sufficiently arduous or the evidence of nature of the work could not be proven, with rejection rates, for this reason, standing at 73 per cent for men and 79 per cent for women.

“Nonetheless, there is no reason to believe that the years-of-service pension would become a much more widely used exit route, given the strict conditions of the years-of-service pension and the demanding application procedure”, ETK senior researcher, Anu Polvinen, said.

The application for a years-of-service pension must document in detail the content of one’s career and a statement from a physician and the employer’s description of the nature of the work is required.

Although the use of the years-of-service pension could increase in the future as the retirement age for old-age pensions continues to rise, Riekhoff said the demanding application procedure may result in only certain groups seeking a years-of-service pension, such as those working for large employers.

“Those who don’t know about the years-of-service pension or who don’t receive adequate support with the application procedure may not apply for this pension even if they were eligible and would benefit from earlier retirement through the years-of-service pension,” Riekhoff said.

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