The Finnish Pension Alliance (Tela) has set out its goal for the upcoming European elections highlighting the Finnish pension model as one that could be expanded across Europe.

In setting out its policy expectations of a new European Commission, Tela argued that more substantial partial funding of pension liabilities, as currently envisaged in the Finnish model, would increase the resilience of pension systems in larger member states, which currently rely entirely on tax and contribution funding.

“The benefit of funding is essentially the return on capital compared to the wages earned by the working-age population. Many member states are quite late with their intentions,” Tela said.

Furthermore, the alliance said there is still more to be done to build on European Commission President, Ursula Von der Leyen’s, work in supporting member states’ own policy choices to meet the ageing challenge.

“Finland will be among the first to age, but we are also prepared for it. Unfortunately, many large EU countries have not understood the importance of national pre-funding in financing statutory pensions, in practice reducing the tax and contribution burden,” Tela said.

Tela argued that the current EU pension policy, geared towards models where individuals provide for their old age or where employers provide supplementary pensions for employees, is ill-suited to the structural change in the labour market. This includes the growing number of micro-entrepreneurs and platform economy workers, as well as vulnerable groups such as women who work more part-time and casual jobs than men.

“There is hardly a statutory, earnings-related pension scheme in the European Union member states that is similar to Finland's and that is maintained throughout a working career for almost all jobs. Moreover, many member states have not yet made provision for the ageing of their populations by funding capital in advance.

“In our country, occupational pension contributions are funded to compensate for fluctuations in the size of age groups, for example. Now funding is being discussed elsewhere – as in Germany – but the question is mainly whether late is better than never.”

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