Amount of pension

As an employee, you accrue pension on your earnings and as a self-employed person on your YEL income. You can also accrue pension for unpaid periods when you study or draw an unemployment allowance or other social benefits.

What affects the amount of pension?

Your employer takes care of your pension cover, and as an entrepreneur you need to take care of it yourself. The larger your salary or your YEL income is, the bigger your pension is. Studying, periods of unemployment and certain social benefits can also increase your pension amount.

The amount of your pension is affected by the life expectancy coefficient, earnings-related pension index, wage coefficient and compensation paid under the motor liability insurance and accident insurance. A voluntary pension insurance paid by you or arranged by your employer will not affect the amount of your earnings-related pension. Read more details below.

  1. The final amount of your pension is affected by the life expectancy coefficient. It reduces your pension depending on the year in which you were born. All age groups have their own life expectancy coefficient. It is confirmed for each age group at the age of 61. You can offset the impact of the life expectancy coefficient by working longer.

    Example 

    The confirmed life expectancy coefficient for those born in 1958 is 0.95404. If a person born in 1958 has accrued a monthly pension of EUR 1,500 by the beginning of his or her old-age pension, his or her pension amount will be EUR 1,431.06 (EUR 1,500 x 0.95404).

    Read more about the life expectancy coefficient on the Finnish Centre for Pensions' website (etk.fi)

  2. If you are granted indemnities under motor liability and accident insurance, they take precedence over earnings-related pensions. The indemnities will be deducted from the amount of your earnings-related pension. In some cases, the indemnity can be so large that no earnings-related pension remains to be paid.

How does working accrue earnings-related pension?

You start accruing pension on your earnings from employment at the age of 17 and on your YEL income from entrepreneurial activities at the age of 18.

You will accrue pension on your gross earnings or, if you are self-employed, on your YEL income, as follows:

  • 1.5 per cent per year
  • 1.7 per cent per year for persons aged 53–62 during the transition period 2017–2025.
  1. A 45-year-old employee earns EUR 40,000 per year. The pension accrual rate is 1.5 per cent. The pension accrual is (40,000x1.5 %) / 12 = 50. The employee earns EUR 50 in pension.

Increase the amount of your pension by retiring later

If you retire after your lower old-age pension age, the increase for deferred retirement will increase your pension by 0.4 per cent per month for each month following your lower old-age pension age. However, no increase for deferred retirement will accrue during the months when you are paid an unemployment benefit.

Read more about the amount of old-age pension

Pension also accrues on unpaid periods

Social benefits

Social benefits may also increase your pension when you have earned at least a total of EUR 18.410,22 (in 2021) from employment during your career or when your YEL income as a self-employed person has reached at least the same amount.

Social benefits will accrue your pension at an annual rate of 1.5 per cent of the earnings that your pension is based on. The amount used as the basis for calculating the pension that you accrue depends on what social benefit you receive.

The table shows you how the social benefit you receive increases your pension.

Situation Social benefit Earnings on which pension accrues
You take parental leave Materniy, paternity and parental allowance 121 per cent of the earnings on which the allowance is based
You become unemployed Earnings-related allowance until the lower retirement age 75 per cent of the earnings on which the allowance is based
You take job alternation leave Compensation for job alternation leave 55 per cent of the earnings on which the compensation is based
You fall ill, your child is ill or you are injured in a traffic or military accident
or suffer from some other injury
Sickness allowance and special care allowance 62 per cent of the earnings on which allowance is based

 

Your pension also grows when you take child-care leave to care for a child under 3 years of age and receive child home care allowance. The amount used as the basis for calculating your pension is EUR 767.09 per month (in 2021).

If you receive the basic unemployment allowance or labour market subsidy from Kela, you will not accrue pension on them, except if you start receiving a disability pension, which includes the component for projected pensionable service.

Completed qualification

You will accrue pension on your studies after you have turned 18 and completed a basic vocational degree or a university degree. You accrue pension on the qualification if it has been completed in or after 2005. Pension accrues on several qualifications, but for a maximum period of five years in total.

Studies accrue pension if you have earned at least a total of EUR 18,410.22 (in 2021) from employment during your career or when your YEL income as a self-employed person has reached at least the same amount.

When you study, you accrue pension as if you earned a salary of EUR 767.09 per month (in 2021). Each year that you study increases your monthly pension by about EUR 11.5 

This is how you accrue pension on different degrees:

Degree Pension accrual Monthly pension
Higher university degree For five years approx. EUR 58
Polytechnic degree For four years approx. EUR 46
Lower university degree or
basic vocational degree
For three years approx. EUR 35

 

If you complete a degree abroad, you will accrue pension if you are entitled to Kela’s financial aid for students.

You will not accrue a pension if you study for a matriculation examination or some other general education degree. This also applies if you study for your licentiate or doctor’s degree or some other post-graduate degree.

Unpaid periods during retirement

Benefits received during unpaid periods also accrue pension during partial old-age pension, survivor’s pension, and part-time pension. In contrast, unpaid periods during disability pension, old-age pension, or years-of-service pension do not accrue pension.

  1. Since 2017, earnings-related pension already accrues for work carried out at the age of 17. In 2005–2016, earnings-related pension started to accrue at the age of 18, and before that, at the age of 23. If you worked at a younger age, you did not accrue pension for that period.

    Pension accrual in 2005–2016

    • 1.5 per cent between ages 18 and 52
    • 1.9 per cent between ages 53 and 62
    • 4.5 per cent between ages 63 and 67

Kela’s national pension and guarantee pension

Pension cover is part of your social security. If your earnings-related pension is small, you may be eligible for Kela’s national pension and guarantee pension.

Kela can pay you a national pension to supplement your income if your earnings-related pension is less than

  • EUR 1,373.30 for persons living alone (in 2021)
  • EUR 1,230.63 for persons living in a marriage or common-law marriage (in 2021).

In addition to the national pension, you may be eligible for Kela’s guarantee pension, if you are living in Finland and all your pensions together before taxes amount to no more than EUR 830.83 per month (in 2021).

For more information on the pensions paid by Kela, contact Kela (Kela.fi).