Working while on a pension

Even as a pensioner you can work. And increase your pension at the same time. Check beforehand to see whether working affects the pension you have already earned.

It is worthwhile working even as a pensioner. Because, even then, every euro you earn increases your pension. Not as much as before, but some anyway. The work you perform while on a pension accrues new pension for you at a rate of 1.5% of your pay until the age of 68. 

The new pension accrues through your earned income. This includes all of the income subject to tax that you earn from your work, such as bonuses and holiday pay, and the income you receive for family caregiving. 

All of the above applies to self-employed persons as well, apart from one exception. If you retire on old-age pension, the normal, i.e. statutory, YEL insurance ends. You can take out voluntary YEL insurance instead. It will accrue your pension at a rate of 1.5 per cent annually. If you carry out entrepreneurial work while on a disability or survivors’ pension, you need to insure yourself normally, under YEL insurance. 

Earned income may affect your pension

Your earned income may affect your old pension, the one you earned before you retired. How it impacts your pension depends mostly on what pension you receive. 

If you work while on an old-age pension, you can work as much as you like. Without your income reducing your old pension.

When on a survivors’ pension you receive survivingspouse’s pension. You can work as much as you want alongside your survivors’ pension.

If you work while on a partial disability pension or disability pension, your pension may decrease. This can happen when your earned income exceeds the limit for receiving pension. Or if you receive other income, such as compensation from accident insurance.

When you retire and your earned income changes, let us know right away. You will ensure that your old pension is always correct. And that you do not have to pay it back to us. 

Working while on partial old-age pension

If you continue at work you will receive salary in addition to the pension. Your salary  do not impact the size of your old-age pension; instead it increases your future pension. Until you turn the upper old-age retirement age.

As an employee, you will accrue pension on your earnings and as a self-employed person on your YEL income. Earnings include all of the income subject to tax that you earn from your work, such as bonuses and holiday pay. 

If you are self-employed and retire on partial old-age pension and continue working, keep your YEL insurance in force. If you reduce your working hours, also reduce your YEL income so that it matches the amount of work you do. If you, instead, decide to stop working altogether, end your YEL insurance.

Working while on disability pension

Working while on years-of-service pension

Working while on part-time pension

Apply separately for the pension you earn as a pensioner

One day you will stop working as an employee or entrepreneur and retire full-time. Re-apply for pension. You will receive, in addition to your old pension, your new pension that you earned while already retired. What age you begin to receive the new pension at depends on what pension you received. If you worked while on old-age pension, you will begin receiving the new pension after you turn 68. Or later if you continue working after that. If you work while on disability pension, you will begin to receive the new pension once you reach your old-age pension age or when your employment relationship ends later.

Taxation of a pensioner’s earned income

Pension income is subject to tax just like income from work. The final tax percentage is dependent on how much pension income and pay you receive during the calendar year. It also depends on the related deductions. 

To ensure that you pay the correct amount of tax on your pension and earnings, apply for two tax cards. One for your pension income and the other for your earned income.