Earnings-related pensions increase by more than 1 per cent
The earnings-related pension index will increase pensions by 1.31 per cent at the turn of the year. The wage coefficient will increase by 2.19 per cent. The index adjustments have been exceptionally large in the past two years. We are now returning to a period of moderate increases.
The Ministry of Social Affairs and Health has confirmed the 2025 indexes for earnings-related pensions.
In 2025, the earnings-related pension index will be 3077 next year, which means a 1.31 per cent increase in pensions at the turn of the year.
The wage coefficient in 2025 will be 1.637. Compared to 2024, the wage coefficient is 2.9 per cent higher next year.
“The level of index adjustments indicates a return to normal. After a few exceptional years, we are returning to moderate increases, and the wage coefficient will once again grow more than the earnings-related pension index”, says Economist Timopekka Hakola from the Finnish Centre for Pensions.
Earnings-related pension index secures the purchasing power of pensions
The earnings-related pension index is used to adjust pensions in payment annually to secure their purchasing power. At the time of retirement, the wage coefficient adjusts career lifetime earnings to the level of the year in which the pension begins.
The weightings of the index adjustments are based on changes in consumer price and earnings level indexes calculated by Statistics Finland. The earnings-related pension index puts greater weight on price development while the wage coefficient emphasizes earnings development.
FAQ about indexes
All earnings-related pensions in payment are adjusted with the earnings-related pension index:
- the old-age pension and the partial old-age pension,
- the disability pension and the temporary disability pension (cash rehabilitation allowance),
- the survivors’ pension (the surviving spouse’s pension and the orphan’s pension),
- the years-of-service pension, and
- the vocational rehabilitation allowance.
The index adjustment is made for the first time in the year following the year in which you retired. For example, if you retire at some point in 2024, your pension will be adjusted with the earnings-related pension index for the first time in January 2025.
Always plan your retirement, including when to retire, to fit your own life situation. If you take out earnings-related benefits, check also how that will affect your taxation. Earnings-related benefits may also affect benefits and pensions you are paid by Kela. The longer you work and the later you retire, the higher your earnings-related pension will be. If you retire late, your old-age pension will grow in two ways: via the increment for late retirement and the new pension you earn while working.
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