Pension-insured earnings of employees more than twice as high as the insured incomes of the self-employed
In 2022, the median insured monthly earnings of employees were 3,000 euros. For the self-employed and farmers, the median monthly insured incomes were 1,350 euros. The largest earnings were received by those in the age group 45–49 years, recent statistics of the Finnish Centre for Pensions reveal.
According to statistics of the Finnish Centre for Pensions, around 38 per cent of the self-employed insured under the Self-employed Persons’ Pensions Act had monthly insured incomes of less than 1000 euros while 22 per cent had monthly insured incomes of 1,000–1,499 euros. Around 38 per cent of those insured under the Farmers’ Pensions Act had monthly insured incomes of 1,500–2,499 euros. For the self-employed and farmers, the median monthly insured incomes were 1,350 euros in 2022.
“For employees, pensions are based on their earnings; for self-employed persons, they are based on their insured incomes. The gap between these two are considerable, which is later reflected in the received pension amounts. From the point of view of earnings-related pension insurance, the monthly earnings of employees were, on average, more than twice as big as the insured incomes of the self-employed in 2022”, explains Statistics Planner Marjo Kaasila (Finnish Centre for Pensions).
The incomes under the Self-employed Persons’ Pensions Act are the monetary value of the self-employed person’s work input. A good rule of thumb is that the insured incomes should correspond to the wage that a self-employed person would pay to an employee hired to do the same work.
Farmers insured under the Farmers’ Pensions Act include farmers, fishermen, reindeer herders and forest owners. In addition, reciepients of science and arts grants are also covered by the Farmers’ Pensions Act and make up 7 per cent of the insured.
Men’s earnings 20 per cent larger than women’s
In 2022, the median insured monthly earnings of employees were 3,000 euros. The median monthly earnings of men were 3,329 euros and of women 2,703 euros.
Kaasila emphasizes that the income distribution of employees is strongly skewed, which is why the median earnings depict the average earnings level better than the average earnings.
Employees’ average monthly insured earnings in 2022 were around 3,300 euros. For the self-employed and farmers, the median monthly insured incomes were 1,850 euros.
Employees’ insured earnings peak in their 40s while self-employed persons’ insured incomes peak in their 60s
When reviewed by age group, the insured monthly earnings peak among 45–49-year-old employees. Their median monthly earnings were more than 3,600 euros in 2022.
For those insured under the Self-employed Persons’ Pensions Act, the median insured incomes peaked in older age groups. In 2022, the median monthly insured incomes of 55–64-year-old self-employed persons were more than 1,600 euros, and for 65–68-year-olds nearly 1,900 euros.
The median monthly insured incomes of those insured under the Farmers’ Pensions Act are highest among 30–34-year-olds. Their monthly insured incomes in 2022 were around 2,000 euros.
Municipal and private sectors growing
At year-end 2022, a total of 3.4 million persons were insured for earnings-related pension benefits. Of them, nearly 1.9 million worked in the private sector and more than 700,000 in the public sector. Around 100,000 worked in both sectors at the same time.
“In Finland, the workforce is increasingly concentrated on the municipal and the private sectors. While the number of State employees has dropped by 10 per cent, the number of municipal sector employees has grown by 10 per cent over the past decade. “Numerically the private sector has grown the most”, explains Development Manager Jari Kannisto (Finnish Centre for Pensions). At the same time, the number of farmers has decreased dramatically, by nearly 30 per cent. The number of other types of self-employed persons has increased slightly.
The role of the State as an employer has been on a downward trend. The number of state employees has declined by 30 per cent since the pension reform in 2005, but now the decline seems to have come to a halt at around 130,000 employees.
Statistics considers also irregular employments
The Finnish Centre for Pensions’ statistics on pension insurance are based on all insured earnings from work, including those from sporadic work that may be for a short period or part-time. The number of persons doing part-time work varies by field, which is also reflected in the average earnings. For the self-employed, the monthly earnings are calculated by the number of months during which the insurance is valid.
Statistics Finland publishes structural statistics on earnings in Finland. According to the statistics Structure of Earnings, the average total monthly earnings of full-time employees in 2022 was 3,848 euros. The median monthly earnings were 3,411 euros.
Nearly 100,000 young start their working life each year
Around 100,000 persons begin to be covered by the earnings-related pension scheme each year. Most of them are young people entering working life. The figure includes immigrants, as well. In 2022, slightly more than half of the insured were under age 20 and nearly one fourth aged between 20 and 29.
In Finland, all paid work and self-employment undertaken between the ages of 17 and 68 must be insured for earnings-related pension benefits. For the self-employed, the obligation to take out pension insurance starts at age 18.
Under Finnish legislation, employers are under obligation to take out pension insurance for their employees. The employer is usually a company, the State, a local government or a parish, but it can also be a private individual.
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