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Pension systems are not easy to comprehend. In Europe several different pension designs coexist. A short story might shed some light on why people take pride in the pension system of their country.

Working life is constantly changing. This has consequences for pensions as well. In Finland, the good news is that employment rates have been rising, careers have been relatively stable and various non-standard forms of employment are covered by the pension system. The challenge is to anticipate developments in the labour market that affect the economic and social sustainability of the pension system in the longer run.

While there is rich research on Finnish retirement, relatively little is known about personal motivations behind retirement decisions. In latest round of the Survey on Health, Ageing and Retirement in Europe (SHARE) Finnish pensioners were asked a simple question: Why did you retire? More than 80 per cent indicated that they retired because they became eligible for a pension. Compared to other European pensioners, the influence of poor health on retirement decisions in Finland raises concern.

The minimum net pension in Norway is the highest in all Nordic countries, but the purchasing power is the largest in Denmark. The Danish can buy a Big Mac each day of the year with one month’s minimum pension. The Finns have to settle for a Big Mac every second day. The Swedes get the lowest number of Big Macs with their monthly minimum pension.

The Board of Directors has approved the new strategy of the Finnish Centre for Pensions as of 2022. The Finnish Centre for Pensions and its extensive interest groups share a common vision for the Finnish pension system. The vision crystalizes the importance of pensions for individuals’ income security and a pension system in financial equilibrium.

Globalisation, deindustrialisation, automation, digitalisation and liberalisation are often believed to make working life more fragmented and unstable. We investigated such claims in the recently completed project “Fragmented work careers?” (“Pirstoutuvatko työurat?”), led by researchers of Tampere University. Overall, we found no definitive trends towards fragmentation and destabilisation in Finland. However, we identified persisting labour market inequalities between genders and socioeconomic groups. These findings have important implications for pensions as well.

The Finnish Centre for Pensions recently reported that Finns continue to retire at a later age. In line with the rising eligibility age for the old-age pension, the average retirement age went up three months in 2019 compared to 2018. This can be seen as a successful outcome of a series of reforms in the Finnish pension system and labour market and is good news in many ways. However, figures of rising retirement ages tend to hide socioeconomic inequalities in extending working lives.

Our pension system is currently sailing through deep waters. The seas are likely to get rougher in the future. Reduced fertility rates and lower interest rates form dark clouds on the sky over our pension system. The most recent gust of icy winds is the corona pandemic, which has only added to the challenges pension financing faces. Yet it is possible to navigate through the rough seas – partly on automatic pilot.

Older people in Finland are forced to give up on things they want to do because of shortage of money and family responsibilities slightly more often than their Swedish and Danish counterparts. Nevertheless, such problems are considerably less common in the Nordic countries than in Eastern and Southern European countries. Things are left undone more often due to shortage of money than family responsibilities.

In Finland, like in most other advanced industrialised countries, low-skilled older workers are at a higher risk of early exit from the labour market than their higher-educated peers. To extend these workers’ working lives, relying on their own responsibility or implementing more government policies alone will not be enough: the help of employers is needed.