Preliminary projections of Finnish earnings-related pensions reveal that they are set to rise by around 2 per cent at the beginning of 2025.

Finland’s Ministry of Social Affairs and Health will confirm the earnings-related pension index towards the end of October. In addition, the wage coefficient is projected to rise by around 2.9 per cent.

This is significantly less than increases at the start of 2024; the earnings-related pension index was 3037, which saw a rise of around 5.7 per cent to earnings-related pensions.

In addition, the wage coefficient in 2024 is 1.637. Compared to 2023, the wage coefficient is 5.1 per cent higher than in 2023.

For those approaching retirement, it means that waiting until 1 January 2025, rather than retiring on 1 December 2024, would be more beneficial.

This is because when determining a starting earnings-related pension, the earnings and income from the work of the insured are adjusted with the wage coefficient to the level of the first year of retirement.

Therefore, those retiring on 1 December 2024 will see their pension rise by around 2 per cent on 1 January, as per the earnings-related pension index forecast.

However, for those retiring on 1 January 2025, the earnings affecting their pension will be adjusted by the 2025 salary multiplier when calculating their pension and the projected increase is around 2.9 per cent.

In the Finnish system, for every month that a person works after reaching retirement age, their pension accrual increases for their entire career by 0.4 per cent due to a deferral increase.

Keva pensions director, Eija Korhonen, explained: “For example, if you work for another year after the lower retirement age, you will get a deferment increase of 4.8 per cent. On top of that, you get an additional pension of 1.5 per cent per year on your earnings.”

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