Part-time pension in Finland and the other Nordic countries

Introduction

The part-time pension is included among the so-called flexible retirement age arrangements, the purpose of which has been to increase individuals’ freedom of choice in withdrawing from working life. In its entirety, the flexible retirement age arrangement consists of three complementary forms of pension, of which the individual early retirement pension and the early or deferred old-age pension came into force in the private sector from the beginning of 1986, and the part-time pension a year later. In the public sector, all flexible pension arrangements came into force simultaneously on 1 July 1989.

The individual early retirement pension is a disability pension granted on relaxed criteria to those who have reached the age of 55. The early old-age pension makes it possible to retire voluntarily at the earliest five years before the normal retirement age, in which case the pension is permanently reduced according to a specified scale. Correspondingly, deferring the pension increases the old-age pension payable. The purpose of the part-time pension, in turn, is to improve the possibilities for a gradual transition from work to retirement. The part-time pension compensates, under certain conditions, for the loss of earnings of wage earners or entrepreneurs who, between the ages of 60 and 64 (in the public sector between 58 and 62), transition from full-time to part-time work.

The part-time pension system in Finland was justified specifically in terms of the needs of older workers: the intention was to make it possible for ageing individuals to reduce their work input to match their gradually declining capacity. At the same time, employees’ social connections through work would be maintained, which was hoped to alleviate the mental strain arising from the change in circumstances. Alongside the interests of employees, an additional consideration brought forward in justifying the part-time pension system is that a flexible pension arrangement can also serve companies’ internal labour turnover and promote the rejuvenation of the workforce that is necessary for production. (AI translation)

• ISSN: 0358-5980
• ISBN: 951-9282-31-9