Finnish average effective retirement age rises to 62.8 years

 

By Natalie Tuck

 14/02/24

The average effective Finnish retirement age rose to 62.8 years in 2023, an increase of more than half a year compared to 2022, the Finnish Centre for Pensions (ETK) has said.

ETK said there are two factors for the increase in the expected effective retirement age: First, the number of people starting to draw an old-age pension in 2023 fell significantly due to the increase in the retirement age, which means that not all people born in 1959 reached their retirement age in 2023.

Second, is the large indexation of pensions in 2022, which meant that people brought forward their retirement from 2023.

“The exceptionally large increase in the pension index at the beginning of last year led many people to bring forward their retirement to the year 2022. This increased the number of people who retired in 2022 and reduced the number of old-age pensions that started in 2023,” ETK development manager, Jari Kannisto, said.

In 2023, only 40,000 people drew the old-age pension, 25 per cent less than the year before.

“The number of people opting for a partial old-age pension also fell sharply. There were still more than 20,000 of them, but they are not counted as pensioners in the statistics,” Kannisto said.

The expected effective retirement age is a key indicator for pension policy. The target was set in the agreement between the social partners and the government. The agreement was first reached in March 2009. Since then, the target has been reaffirmed in Katainen’s government programme.

According to the target, the expected effective retirement age should rise to at least 62.4 years by 2025. This target has been achieved ahead of schedule. In 2023, the effective expected retirement age exceeded the target by 0.4 years.

“We are at the finish line, and a little further into the lap of honour. The increase in the effective retirement age has been surprisingly rapid. The main reason is the increase in the retirement age for the old-age pension. The good employment situation has also contributed to the positive trend. The target was already reached in 2021, but the year before last the expectation fell slightly due to the high number of new pensioners,” Kannisto said.