Effects of pension reform emerging – working lives extended as expected
Many of those born in 1955 continued working for another three months. The gradually increasing retirement age has deferred retirement but, so far, it has not caused a rise in the number of people retiring on a disability pension. This is evident from recent statistics of the Finish Centre for Pensions.
The retirement age rose in connection with the 2017 earnings-related pension reform. The retirement age is now linked to a person’s birth year. For those born in 1955, the retirement age rose to 63 years and 3 months. The first who reached the new retirement age retired on an old-age pension last year.
In 2018, the number of new retirees on an old-age pension decreased by around 8,000 persons year-on-year. It is mainly due to the rising retirement age. Last year, nearly 70,000 persons retired on an earnings-related pension. Nearly 50,000 of them retired on an old-age pension. The total number of new retirees on an earnings-related pension decreased in 2018 by 6,000 persons compared to in 2017.
Of the insured born in 1955, roughly 35 per cent retired on an old-age pension in 2018. In 2017, the corresponding figure for the insured born in 1954 was 47 per cent. The difference is significant.
At the same time as the number of new retirees on an old-age pension decreased, retirement was postponed. As the share of working insured persons has remained virtually unchanged up to the new retirement age, working after turning 63 appears to have increased.
“Those born in 1955 have continued working longer than those born in 1954. In other words, they have continued their working life at least up to the new retirement age. This was one of the key aims of the pension reform,” development manager Jari Kannisto of the Finnish Centre for Pensions states.
No major impact on disability pensions
The rising retirement age has not significantly increased the number of people retiring on a disability pension close to their retirement age. In 2018, the number of new retirees on a disability pension rose by 1,000 compared to in 2017. Only slightly more than 100 of them had turned 63 years.
“At least so far, raising the retirement age has not significantly increased retirement on a disability pension close to the retirement age. Slightly more than 100 is not a significant amount compared to the thousands of people who have deferred retirement on an old-age pension,” says Kannisto.
All persons born in 1955 did not reach their retirement age in 2018. That is why the total number of persons born that year retiring immediately after reaching their retirement age will be known later. Similarly, the number of persons retiring on a disability pension at age 63 will grow in this age group.
“Of those born in 1954, more than 21,000 persons retired on an old-age pension immediately after turning 63. Of those born in 1955, the number of persons retiring on an old-age pension immediately after reaching their retirement age is likely to rise to the same level,” Kannisto projects.
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Jari Kannisto, Development Manager, phone +358 29 411 2232, jari.kannisto(at)etk.fi