Pension negotiations regarding municipal, state. church and Kela employees concluded today, with a proposal to gradually increase the current public sector retirement age of 63 years to 65. The new retirement age would apply to those born from 1955 onwards. If the proposal proceeds according to plan the reforms will come into force in 2017.
The Ministry of Social Affairs and Health published the plan on Monday, saying that it would bring public sector policy into line with previously agreed private sector reforms.
The retirement age would rise gradually, by three months for each year from birth up until 65 years. According to the Ministry those born in 1962 would be the first age group with a minimum retirement age of 65 years.
Live longer, work longer
The later people are born, the longer they are living, and the aim is to reflect this by indexing the retirement age according to date of birth. Hence, when the retirement age of 65 years is reached by the cohort of retirees to whom this initial three month indexation applies, the plan is to continue to adjust the future minimum retirement age to reflect exponentially longer life expectancy.
This means the minimum age of being put out to pasture would in future years be raised beyond 65, by a maximum of two months per every year of life. The first demographic to feel this impact would be those born in 1965 or later.
Until 1989 certain professionals in the public sector had field-specific minimum retirement ages. For example, earlier reforms gave professional in fields like teaching and care-work the choice to opt into the new, higher, minimum age or to stick to their own field-specific cut-off.
However, the current reforms will affect those who were born in 1955 or after who had previously opted to end their careers as early as possible. The Ministry estimates that this will affect some 8,500 people, while workers organisations peg that figure at 10,500.
The Federation of Salaried Employees Pardia does not accept the proposal to raise the professional retirement age by three months per year from 2018 onwards. The workers organisation says that the savings obtained by raising the retirement age for these groups would be negligible.
Military personnel also in for a longer march
Soldiers can also expect a longer wait before they can take their pensions. The current age of 55 years would increase by up to two years, affecting 10,000 service personnel in a move which Pardia says would undermine Finland’s defense programme.
In the future, all public sector employees would accrue pension payments at a rate of 1.5 per cent of their salary. The current age-linked accrual rates would be abolished. This, however, would not apply to those who are currently 53 to 62 years of age. For this demographic, the pension accumulation is pegged at 1.7 per cent of salary until the end of 2025.
According to the Ministry, pensioned part-time retirement will be abolished in its current form. However, workers from 63 years old can retire before the official retirement age if they have worked for at least 38 years in stressful and taxing work.
Government bills relating to pension reform will be dealt with in the Finnish parliament in late summer, with the reforms scheduled to come into force in 2017.