PENSION BENEFITS

On the basis of age

As of 2005, the choice of retirement age is flexible and varies anywhere between the ages of 63 and 68. Between these years, both employees and self-employed persons can draw the old-age pension that they have earned by the time they retire.

Moreover, retirement can also be deferred beyond the age of 68, when an increment of 0.4 per cent for deferred retirement is added to the pension for each month after 68.

People aged 62 can take early retirement. The reduction for early retirement is 0.6% for each month that the pension is taken prematurely. The reduction cannot exceed 7.2 per cent.

On the basis of part-time employment

Employees and self-employed persons, who transfer from full-time employment to part-time employment, are entitled to a part-time pension. Persons born in 1947 or later are entitled to a part-time pension between the ages of 58 and 67. For those born in 1953 and later, the age limit is 60-67. The pension may continue until the age of 68, provided that the part-time employment continues. For those born in 1946 or earlier are entitled to a part-time pension before aged 65.

On the basis of illness

The authorized pension providers pay rehabilitation allowance and contribute to the costs of vocational rehabilitation. This is provided when a person’s working capacity is at risk of being reduced because of illness and he/she has to take up an occupation or employment that is better suited to his or her health and physical condition.

Disability pensions are paid to persons under the age of 63 whose working ability has deteriorated because of an illness for at least a year. Persons older than 63 who have become disabled are entitled to retire on an old-age pension.

Persons whose working ability has been reduced by at least three-fifths are granted a full disability pension. If the reduction is less, but at least two-fifths, the pension is granted as a partial pension. The amount of partial pension is half of a full disability pension.

If a person recovers his/her working ability with the help of treatment or rehabilitation, the pension is granted for a fixed period as a rehabilitation assistance. If return to work is unlikely, the pension is granted as a disability pension until further notice.

The qualifications for disability pensions to persons aged 60 or over are comparable to those of people taking early retirement.

On the basis of unemployment

Unemployed persons aged 60 or over who have received daily unemployment allowance for at least 500 days have a right to an unemployment pension.

Only persons born in 1949 or earlier are entitled to unemployment pensions. The entitlement is discontinued for those born in 1950 or thereafter. Under certain circumstances they are entitled to a daily unemployment allowance until the age of 65 or they can retire on an old-age pension after they have reached the age of 62.

On the basis of the death of a family provider

Survivors’ pensions are paid to widows/widowers and children under the age of 18. According to the pensions act only married people may receive a surviving spouse’s pension. Partners who had been living in a non-marital relationship may not receive a survivors’ pension. Both men and women may receive a survivors’ pension. In addition, the former spouse may be granted the spouses’ pension if the deceased person was liable to pay maintenance allowance to the former spouse after divorce.

Spouse’s pension is always based on the employment pension that the deceased person received or would have received. Widows and children’s pensions are a quantum of the pension that the deceased person would have received. The amount paid out as a survivors’ pension may not exceed the pension that the deceased person would have received.