The gradual increase of the retirement age in Finland has raised the employment rate of those approaching their retirement age “considerably”, according to the Finnish Centre for Pensions (ETK).

However, ETK’s study found that unemployment and disability retirement had also increased.

The researched examined how the rising retirement age had been reflected across different labour market states between the former and current retirement age.

The data used was for Finnish people born between 1954 and 1956, with those born in 1954 having a retirement age of 63, increasing by three months for those born in 1955, and again for those born in 1956.

Following the three-month increase in the retirement age per year, the proportion of people drawing an old-age pension had decreased by, on average, 37 percentage points between the former and current retirement age.

Around half of the reduction in the number of retired people was reflected in a rising employment rate.

“As a result of the increase of three months per year in the retirement age, the share of employed persons has grown by an average of 20 percentage points to 49 per cent,” commented ETK economist, Satu Nivalainen.

“In other words, the employment rate has risen 1.7-fold. The lion’s share of the growth can be explained by those of working age remaining in work longer due to the rising retirement age.”

The retirement age has raised the average age at which people exit the labour force by 0.6 months, while a six-month increase in the old-age retirement age has deferred the exit from the labour force by an average of 1.3 months.

Employment was found to have increased more in the private sector than the public sector.

A three-month increase in the retirement age has nearly doubled the proportion of employed people in the data set from the private sector.

Meanwhile, for those in the public sector, employment has risen by 1.4 times.

“In the public sector and among the highly educated, a considerably higher share of persons continued working past their retirement age already before the pension reform,” Nivalainen explained.

“That is why the employment effects of the reform in the public sector and among the highly educated are lesser.

“The rising retirement age has led to savings and higher tax income, but at the same time, the disability pension and social security expenditure has grown.”

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