Interest groups have heaped heavy criticism on survivors’ benefit reforms that will limit widows' pensions to a maximum of 10 years, rather than paying the benefit for life as is the case now. The new legislative package will affect widows and widowers born after 1975 and is due to take effect from the beginning of 2022.
A recently-concluded commenting round for the draft legislation revealed resistance to the proposals, particularly from groups likely to be adversely affected by the reforms.
Carers Finland, an NGO that represents family carers, said in a statement that the proposal for a term limit to widows' pensions -- essentially a cut to the programme -- will be especially hard on spouse carers, 70 percent of whom are women.
"The proposed cuts to widows' pensions do not fit with a broader strategy to support family carers. Spouses cannot be forced into poverty and have to rely on income support in the final stages of their lives," the association said.
"Instead of spending cuts we in Finland need to find ways to incentivise home care and think about how we can get people to become family carers, especially so that it is not [seen as] an unreasonable burden," Carers Finland executive director Sari Tervonen added.
Meanwhile, the young widows association said that reforms should take into consideration a survivor's financial situation rather than imposing a term limit on the benefit.
"A fixed term could lead to financial distress for survivors and in some cases they could possibly have to rely on taxpayer-funded social benefits," executive director Miia Iivonen noted.
No kids, no pension
Iivonen pointed out that major sticking points in the proposed legislation include limitations that relate to the nature and duration of relationships as well as a survivor's age. She said that widows and widowers under the age of 50 will suffer the most.
"For example a childless widow will not get a pension. The constitution and equality laws prohibit people from unequal treatment because of their age and other personal characteristics. Young widows and widowers denied a pension can rightly ask why this kind of discrimination is permitted in survivors' pension law," she explained.
Finland for all Families, a network project for diverse families, also condemned the treatment of childless widows in the draft bill. "This is especially wrong in situations where couples have no shared children because a spouse is childless due to illness or otherwise involuntarily," the group said.
Billions spent on pensions
The Finnish Pensioners’ Federation said that the term limit on pension benefits would most penalise low-income female family carers. "Some of them have stinted on their own social and pension security to stay at home and care for a relative in need. They may have cared for a partner for decades and may have been tied to the home," the organisation noted.
The NGO added that many retired family carers receive very small pensions and noted that the modest family care allowance cannot compensate for the loss of salaried income.
It also pointed out that widows’ pensions do not account for a significant portion of spending in the pension system. "In 2019, a total of 1.8 billion euros was spent on survivors’ benefits, just six percent of all pension costs," it added.
Improvements in new law
The commenting round for the survivors’ benefit reform bill ended on 5 November. While critics of the draft law were outspoken, a majority of experts backed the changes. The biggest supporters came from labour market organisations, many of whom were involved in shaping the legal reforms.
Other provisions in the bill are expected to offer improvements on the current system. For example, it provides better protection for unwed spouses. They will now be entitled to a survivor’s pension if they have cohabited for at least five years and have one underaged child. Previously, only married spouses were eligible for the benefit.
Additionally, children will receive an orphan’s pension until the age of 20, instead of the current 18 years.
The reform will not affect current survivors’ benefit arrangements, but will take effect from 2022.
The introduction of a 10-year limit on the widows' pension will reduce the number of recipients starting from the 2040s, with the biggest declines occurring from the 2060s. This means that the savings envisioned in the reform will not happen overnight.
The change is expected to increase expenditure on earnings-related pensions until the year 2048. The spending impact has been estimated at an additional 51 million euros annually.
Every year roughly 13,000 individuals begin receiving the survivors’ benefit, 80 percent of them women. On average they receive about 600 euros monthly.
Currently roughly 250,000 widows and widowers receive the benefit, while about 17,000 children get an orphan’s pension.