In the middle of September, the Finnish Centre for Pensions published a forecast of the 2024 indices. The earnings-related pension index is expected to be slightly greater than the wage coefficient: compared to 2023, the earnings-related pension index would increase pensions by 5.5 per cent, with the increase based on the wage coefficient being 5.1 per cent. This year, the increase based on the earnings-related pension index was 6.8 per cent and the increase based on the wage coefficient was 3.8 per cent.
According to the forecast, retiring no later than on 1 December 2023 will result in a pension that is approximately the same than a pension starting on 1 January 2024.
- If you retire on 1 December 2023, earned income affecting your pension is adjusted by using the 2023 wage coefficient. The earnings-related pension index for 2024 will increase the amount of pension paid to you as of 1 January 2024.
- If you retire on 1 January 2024, the earned income affecting your pension will be adjusted using the 2024 wage coefficient. In this case, the earnings-related pension index for 2024 will not be applied.
The final index figures will be available towards the end of autumn. The Ministry of Social Affairs and Health will confirm the indices by the end of October.
In October–November, after the indices have been confirmed, you can log in to Varma Online Service to calculate your estimated pension based on the new indices. After the indices have been confirmed, you can also use the calculator available at varma.fi to calculate the index increase for a pension that is already being paid.
Who has the choice to decide on when to retire?
Deciding whether to retire in December or January is possible in the following situations:
Old-age pension
You reach your minimum pensionable age no later than in November. A prerequisite for receiving old-age pension is that your employment ends. For this reason, please consider your notice period when you decide on retirement. Entrepreneurs are not required to end their entrepreneurial activities.
Partial old-age pension
You reach the minimum age for partial old-age pension no later than in November or you already are on partial old-age pension and you want to change the amount of pension from 25 per cent to 50 per cent.
Years-of-service pension
You turn 63 no later than in November.
The possibility to decide on the start date may also apply to persons going on partial disability pension if they have already received a preliminary decision and to persons starting vocational rehabilitation.
The earnings-related pension index is used to adjust any paid pensions
Earnings-related pensions are calculated by using two indices: the wage coefficient and earnings-related pension index.
The wage coefficient is used for calculating the pension for a retiring person. Wages and confirmed income for your working career are adjusted to the level of the year when the pension starts by using the wage coefficient. In the wage coefficient, changes in wage-earners’ income level are given a weighting of 80 per cent, whereas changes in consumer prices are given a weighting of 20 per cent.
During retirement, the amount of your pension is adjusted on an annual basis in January based on the earnings-related pension index. In the earnings-related pension index, the weight of changes in consumer prices is 80 per cent, whereas the weight of changes in the income level is 20 per cent.
The percentage increases are the same for everyone regardless of the amount of earned income and pension, but the euro amount depends on the amount of earned income and pension.
The index increase will be automatically applied to any paid pension and no separate application is required.
Read more about the forecast by the Finnish Centre for Pensions
News updated on 15 September 2023 based on the earnings-related pension index and wage coefficient increase percentages pursuant to the most recent economic cycle forecast published by the Finnish Centre for Pensions.
Take these matters into account when considering retirement
- Plan the retirement to suit your own situation in life.
- Salaries are usually higher than pensions.
- Each month, more pension accrues based on earned income at a rate of 1.5%.
- The increase for late retirement adds a further 0.4% per month to the pension if not retiring on old-age pension immediately after reaching the minimum retirement age.
- Consider the impact of taxation and other benefits on pension.