Two in five (40 per cent) of Finns born in 1959 have claimed a partial old-age pension before retirement age, research by the Finnish Centre for Pensions (ETK) has revealed, indicating that the popularity of early partial retirement in Finland has grown “significantly” in recent years.

This is a notable rise compared to the 20 per cent of those born in 1956 who did the same.

The uptake of partial old-age pensions increased over the past couple of years, as around 12,000 people began receiving this pension in 2020 and 2021, compared to over 30,000 people in 2022. However, his number dropped to 20,000 in 2023.

Commenting on this, ETK economist, Satu Nivalainen, said: “The high popularity of the partial old-age pension in 2022 was influenced by an unusually large increase in the earnings-related pension index in 2023. This increase benefited those who started their pension at the beginning of 2023.”

Looking ahead, the research indicated that a further increase in the earnings-related pension index at the beginning of 2024 has “boosted” interest in claiming the partial old-age pension among those eligible in the previous year.

The minimum age for receiving a partial old-age pension will gradually rise to 62 for those born in 1964 and later.

Nivalainen said it is “difficult” to predict how the increase in the age limit will affect the take-up of this pension benefit.

The research found that several factors influence the decision to take a partial old-age pension, including gender, employment status, and self-employment.

Men are more likely than women to opt for this pension, and those who have faced unemployment or have self-employed careers, along with individuals with long working histories, are also more inclined to take this financial support.

The majority of those who have opted for a partial old-age pension work in the private rather than the public sector.

“Although the popularity of partial old-age pensions has increased significantly in recent years, the characteristics of those who choose this pension remain similar to those observed between 2017 and 2020,” Nivalainen said.

Approximately four in five people who received a partial old-age pension were still employed at the end of the year prior to starting to receive their pension.

Unemployment was cited as the reason for 20 to 30 per cent of all new pension claims, with a slightly higher occurrence among men.

Geographic factors also play a role; individuals in areas with higher unemployment rates, particularly in Northern Finland, are more prone to take early retirement.

“In particular, men living in regions with higher unemployment are more likely to take up a partial old-age pension than in other regions. But for women, the local unemployment rate does not affect the decision to take the pension”, Nivalainen stated.

The partial old-age pension was introduced in the 2017 pension reform, with most of the people who take this pension choosing to take 50 per cent of the earnings-related pension they have earned.

It is also possible to take 25 per cent of the accrued pension. There is no upper age limit for starting the partial old-age pension.

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