There will be a 5.7 per cent increase to earnings-related pensions in Finland from 2024.

The Finnish Centre for Pensions (ETK) has said that the earnings-related pension index, which is based on changes in the consumer price and income level index calculated by Statistics Finland, has increased slightly more than the wage coefficient.

In 2024, the earnings-related pension index will be 3037, which results in the increase of around 5.7 per cent to earnings-related pensions at the turn of the year. The wage coefficient in 2024 will be 1.637 producing a 5.1 per cent increase next year.

In Finland, the earnings-related pension index is split heavily in favour of inflation (80 per cent) compared to wage rises (20 per cent). In contrast, the wage coefficient, at the time of retirement, adjusts career lifetime earnings to the level of the year in which the pension begins.

When the indices were last adjusted, the earnings-related pension index was considerably higher than the wage coefficient. That favoured retirement before the end of 2022. As a result, many who were already considering retirement took out their earnings-related pension before December 2022.

Now, however, ETK economist, Timopekka Hakola, said the situation is different.

“This time, the gap between the indexes is rather small, as we projected at the turn of August-September," he says. "That is why the timing of retirement is not as significant for the pension amount as it was a year ago."

Nevertheless, Hakola has advised people planning to retire in 2023, to apply for their pension by the end of November 2023. “If you are already retired, you don’t have to take any action because of the index adjustment. Pensions in payment increase automatically, so you don’t need to claim it separately," he adds.

The Ministry of Social Affairs and Health in Finland will confirm earnings-related pension indexes for 2024 at the end of October.

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