Employee retirement: What does the employer need to do?
Read this page to find out what you, as an employer, should know and how to proceed when your employee retires.
What to do when your employee retires on an old-age pension?
When your employee is about to retire on an old-age pension, you usually need to do three things:
- Make sure the employee applies for an old-age pension.
- Agree on the ending date of the employment relationship.
- Report the termination and final pay to the Incomes Register.
This helps ensure that the transition to retirement is smooth, without interruptions in salary or pension payments.
However, under the Employees Pensions Act, the employment relationship does not need to end if the employee retires at the upper age limit for old-age pension.
When can an employee retire on an old-age pension?
An employee can retire on an old-age pension once they have reached their own minimum retirement age. The retirement age is determined by the employee’s year of birth.
Ask your employee to check their retirement age in the MyPension service.
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Check retirement age in MyPension service
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Read more about retirement age
Does an old-age pension start automatically?
No. Employees must apply for an old-age pension themselves. We recommend submitting the application approximately two weeks before the planned pension start date.
Encourage your employee to apply through the MyPension service.
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Apply in the MyPension service
Does the employment relationship need to end before old-age pension begins?
Yes. Before an old-age pension can begin, the employment relationship must end.
In practice, it is usually best to end the employment relationship on the last day of a month so that the pension can start at the beginning of the following month.
An exception applies if your employee is applying for an old-age pension at the upper age limit for old-age pension. In that case, the employment relationship does not need to end.
What does the employer need to report to the Incomes Register when an employee retires?
Report the following information to the Incomes Register:
- the end date of the employment relationship
- the reason for termination
- final pay and any other earnings related to the termination of employment.
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- Report your retiring employee’s employment termination details and final pay to the Incomes Register in the usual way using an earnings payment report. The information is transferred to us from the Incomes Register.
- If the employee continues working for the same employer while receiving a pension, you must still report the employment end date to the Incomes Register with the reason “retirement”.
Employment termination details
When reporting termination details, provide:
- the end date of employment
- the reason for termination
If final pay is paid in more than one instalment, include the employment termination details on every earnings payment report relating to the final pay.
Final pay
Final pay is the pay you provide when the employee’s employment relationship ends. It may include, for example:
- overtime compensation
- holiday bonus
- holiday compensation
- compensation for unused working time reduction leave
- other similar payments
Final pay also includes performance bonuses and other earnings that are paid after the employment relationship has ended.
If final pay is paid in a single instalment, report it to the Incomes Register at the same time as the employment termination details.
Are you a self-employed person or an employer of a microbusiness?
An employee’s retirement is usually straightforward when you remember these three steps:
- The employee applies for an old-age pension.
- Together, you agree on the date when the employment relationship ends.
- You report the information to the Incomes Register.
Read the instructions above on how to submit an Incomes Register report.
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Apply for pension
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Partial old-age pension
With a partial old-age pension, your employee can decide how much they want to work. An employee can start receiving a partial old-age pension at the age of 61. In 2025, the minimum age for a partial early old-age pension increased to 62.
Read more about partial old-age pension.
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Your employee may qualify for a disability pension if they have not yet reached their minimum retirement age and their ability to work has been reduced due to illness or injury for at least one year.
A fixed-term disability pension, known as a cash rehabilitation benefit, may be granted if we estimate that the employee's work ability is likely to improve. The benefit is paid during the rehabilitation period, that is, while the employee is recovering their ability to work.
Read more about disability pension
Read more about cash rehabilitation benefit. -
A disability pension or cash rehabilitation benefit can also be granted as a partial disability pension or partial cash rehabilitation benefit if the employee's work ability has been partially reduced due to illness or injury for at least one year.
Read more about partial disability pension.
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If your employee passes away, their spouse and children may be entitled to survivors’ pensions. Survivors’ pensions can be applied for through an online application.
Read more about survivors’ pensions for a spouse and children.
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Your employee may want to explore a years-of-service pension if they have worked for at least 38 years in strenuous and demanding work and have an illness affecting their work ability. It has been possible to retire on a years-of-service pension since 1 February 2018.
Read more about years-of-service pension.
Can an employee continue working while receiving a pension?
Yes. An employee can continue working while receiving an old-age pension or a partial old-age pension. Working does not reduce the amount of an old-age pension.
Remember: agree separately with your employee if they wish to continue working after retirement.
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Read more about working while retired
What should you do if an employee starts receiving a partial disability pension and continues working?
Before we can make a pension decision, we need information about the employee's earnings from part-time work. Please report the earnings using our online form or the form submitted with the employee's application.
If the information has not been submitted together with the application, we will request it later.
What earnings should be reported?
- Report all taxable income paid for work, such as:
- salary
- supplements and allowances
- holiday bonus
- performance bonuses
- fringe benefits.
The employee's earnings must remain within their personal earnings limit.
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Report earnings from part-time work
When do we ask employers for additional information?
We only ask employers for additional information when required. For example, we may request information about the employee's work tasks or their opportunities to continue working.
In situations involving a prolonged illness, an occupational health negotiation can help assess the employee's ability to continue working. Please send us the memorandum from the negotiation as an attachment to the Medical Statement B provided by occupational health services.
Employees applying for a years-of-service pension usually submit the employer's statement themselves. If the statement is missing, we will request it from the employer.