WHAT WAGES ARE USED TO CALCULATE TEL PENSIONS?

TEL pensions are calculated from all employment relationships separately, so the wages of each employment affect the amount of earnings-related pensions. The TEL pay incorporates the entire wage subject to withholding tax, except for the holiday pay paid at the end of an employment relationship. Thus, for example overtime pay, fringe benefits and holiday bonuses are included. TEL contributions also have to been paid for these earnings.

The calculation rule for pensionable wage changed at the beginning of 1996. According to the rule, the pension is calculated on the earnings of the last ten full calendar years. The pensionable wage for the years preceding the change is calculated in accordance with the old rules, in other words, using the earnings of two average years from the employee’s four last years of employment.