The evaluation was commissioned by the Finnish Centre for Pensions and carried out by Professor Nicholas Barr of the London School of Economics and Professor Keith Ambachtsheer, Director of the Rotman International Centre for Pension Management at the University of Toronto.

Professor Barr recommends that Finland raise the lower limit of retirement age to reflect increasing life spans. He does not believe that current incentives will increase the actual age of retirement sufficiently.

Barr suggests a model where retirement occurs later than it does now, but with greater flexibility. To promote later, but more flexible retirement, Barr suggests that pensions can be paid out at rates of 25, 50 or 75 per cent, while the deferred element continues to grow.

Nicholas Barr thinks the Finnish pension system is not in a crisis, which is why changes can be allowed to develop over time.

Room for improvement

Professor Keith Ambachtsheer also identifies many strengths in the Finnish pension system. He puts special emphasis on the functionality of the institutions involved, and their efficient work distribution. However, Ambachtsheer also sees room for improving efficiency.

Ambachtsheer draws attention to the administrative costs of Finnish pension providers. Employer-related service costs and marketing and sales costs are higher for Finnish pension providers whose clientele consists of a large number of employers. Other factors contributing to the higher costs include the smaller sizes of the Finnish pension providers and greater complexity of the benefit structure.

His view is that the health of Finnish pension system is highly dependent on the country's national economy and employment rate. At the same time, a large share of investments, roughly a third, is concentrated in Finland. From the perspective of diversifying risks, the share of international investments should be expanded. More extensive cooperation with leading pension organisations abroad could also, he says, bring new investment opportunities.