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Citizens' Initiative to boost pensions goes to parliament

A Citizens' Initiative on restoring the index link between occupational pensions and wages growth was submitted to parliament on Thursday. The initiative gathered the support of nearly 85,000 people, who want to see a boost to occupational pensions—but it could risk emptying pension funds and there appears to be little support among MPs.

Vanhus laskee taskulaskimella.
Finnish pensioners want a boost to their monthly budgets. Image: Ismo Pekkarinen / AOP

Parliament will consider a Citizens' Initiative to restore the link between wages growth and occupational pensions, after the initiative gathered the support of 84,820 people. The threshold for consideration by parliament is support from 50,000 Finnish citizens.

This initiative aims to boost occupational pensions by increasing them each year in line with the average growth in wages across the economy, rather than the current index which takes 80 percent of its weighting from consumer price inflation and 20 percent from wages. In practice, that means pensions grow slower than wages, eating away at pensioners' earning power.

Occupational pensions were annually uprated in line with average wages until 1977, when the index governing pension increases switched to one based half on consumer price inflation and half on salaries. In 1996 that changed to the current system.

The initiative was proposed by former SDP MP Kimmo Kiljunen, who now chairs the Pensioners Movement. He says the switch would help fight pensioner poverty, but critics argue it would have no effect on the basic state pension, which is received by the poorest pensioners. Instead it would benefit most those already retired on larger pensions.

An Yle survey conducted in the spring found that no parliamentary party supported the proposal. The initiative will first be discussed in a preliminary debate, before passing to be handled by a parliamentary committee which can recommend it be thrown out, or that it be considered as legislation by MPs.

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