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Finland: Invalidity Previous Table Homepage Next Table   Applicable statutory basis Applicable statutory basis National Pensions Act 347/1956 (Kansaneläkelaki, KEL). Seamen's Pensions Act 72/1956 (Merimieseläkelaki, MEL). Employees' Pensions Act 395/1961 (Työntekijäin eläkelaki, TEL). Temporary Employees' Pensions Act 134/1962 (LEL). Local Government Employees' Pensions Act 202/1964 (KVTEL). State Employees' Pensions Act 280/1966 (VEL). Evangelical-Lutheran Church Pensions Act 298/1966 (KiEL). Self-employed Persons' Pensions Act 468/1969 (Yrittäjien eläkelaki, YEL). Farmers' Pensions Act 467/1969 (MYEL). Pension Act for Performing Artists and Certain Other Employee Groups 1056/1998 (TaEL).   Basic principles Basic principles Dual system of an universal coverage system (national pension, Kansaneläke) guaranteeing a minimum pension and an insurance system (employment pension, Työeläke) covering all economically active persons (employees, self-employed, farmers). The pension schemes are integrated and when other pension income is above a given limit no national pension (Kansaneläke) is paid. Voluntary supplementary company schemes exist but are of relatively small importance.   Field of application Field of application National pension (Kansaneläke): Compulsory coverage for all residents aged 16 to 65. Employment pension (Työeläke): All insured employees aged 14 to 65 and self-employed persons aged 18 to 65. Separate laws for different groups (see above; the most important law is the Employees' Pensions Act, TEL) adapting the general principles to different circumstances.   Exemptions from compulsory insurance Exemptions from compulsory insurance Employees: no exemptions. Self-employed, farmers: Liable to take out insurance after 4 months of self-employment and when the annual insurable income exceeds FIM 28,947 (EUR 4,869) for self-employed and FIM 14,473 (EUR 2,434) for farmers.   Risk covered Definitions Both national and employment pensions: Disability pension (Työkyvyttömyyseläke): an insured person who has lost his work capacity through illness and whose incapacity is estimated to last for at least one year. Rehabilitation cash benefit (Kuntoutusraha): an insured person whose ability to work is assessed to be restorable by rehabilitation. Individual early retirement pension (Yksilöllinen varhaiseläke): an insured person who has reached the age of 60, has had a long working career and who is incapable of continuing at his/her present employment because of work-related stress and fatigue and other factors. According to transitional provisions, the age limit is 58 for persons born in 1943 or earlier.   Conditions 1. Minimum level of incapacity for work National pension (Kansaneläke): No level specified. Employment pension (Työeläke): Disability pension (Työkyvyttömyyseläke): No more than 2/5 of working capacity left. Partial disability pension (osatyökyvyttömyyseläke): No more than 3/5 of working capacity left. Individual early retirement pension (Yksilöllinen varhaiseläke): no level specified. 2. Period for which cover is given Both national and employment pensions: Disability pension (Työkyvyttömyyseläke): From the end of the maximum period of payment of sickness benefit (300 days) for as long as the conditions are fulfilled. At the age of 65 the disability pension is automatically converted into old-age pension. Rehabilitation cash benefit (Kuntoutusraha): From the end of the maximum period of payment of sickness benefit (300 days) when the disability pension (Työkyvyttömyyseläke) is awarded on a temporary basis as a rehabilitation cash benefit. Individual early retirement pension (Yksilöllinen varhaiseläke): from the entitlement to the pension for as long as the conditions are fulfilled, converted automatically to old-age pension at the age of 65. 3. Minimum period of affiliation for entitlement National pension (Kansaneläke): 3 years of residence after the age of 16. Employment pension (Työeläke): Employees: none; accrual status from the first day of employment. Self-employed: 4 months.   Benefits 1. Determining factors for the amount of benefits National pension (Kansaneläke): Flat-rate amounts (depending on marital status, municipality, duration of residence in Finland, and the amount of employment pensions, Työeläke). Employment pension (Työeläke): Accrued pension amount increased with additional accrual years credited up to retirement age. 2. Calculation method, pension formula or amounts National pension (Kansaneläke): Disability pension (Työkyvyttömyyseläke): Full amount between FIM 2,231 (EUR 375) and FIM 2,655 (EUR 447) according to marital status and municipality. A full pension if resident of Finland, 80% of time after age 16 and before disability. Otherwise pension is adjusted to the length of residence. Reduced by 50% of the amount of Employment pension (Työeläke) and other Finnish and foreign pensions. Pensioners' care allowance (Eläkkeensaajien hoitotuki): 3 categories: FIM 284 (EUR 48), FIM 708 (EUR 119) and FIM 1,415 (EUR 238) per month. Payable to compensate for costs arising from home care or other special expenses caused by illness or injury. Pensioners' housing allowance (Eläkkeensaajien asumistuki): may be awarded to a pensioner residing in Finland. The amount is proportional to the pensioner's income and housing costs and some other factors. Employment pension (Työeläke): Disability pension (Työkyvyttömyyseläke): Accrued pension 1.5% per accrual year. Accrual rates for credited period is: 1.5% up to age 50, for 50 – 59 years 1.2% and from 60 years 0.8%. Partial disability pension (osatyökyvyttömyyseläke): 50% of the full disability pension (Työkyvyttömyyseläke). Individual early retirement pension (Yksilöllinen varhaiseläke): equals the disability pension (Työkyvyttömyyseläke). 3. Reference earnings or calculation basis National pension (Kansaneläke): Not applicable. Employment pension (Työeläke): Pensionable salary is based on the earnings of the last 10 years and calculated separately for each employment relationship. The number of years to be taken into account will be gradually raised from the former 4 years to 10 years starting from 1996. The full 10-year period being fully in effect by the year 2005. Years with exceptionally low annual income will not be taken into account. For credited period the pensionable salary of the last actual employment relationship is used. No ceiling for reference earnings. 4. Non contributory periods credited or taken into consideration Basically none. However, if leave from work due to e.g. maternity is less than one year, this year is credited in most pension schemes (not Temporary Employees' Pensions Act, LEL, and Pension Act for Performing Artists and Certain Other Employee Groups, TaEL). 5. Supplements for dependants: Spouse - Children Spouse: National pension (Kansaneläke): no new supplements granted after 1.1.1996. Spouse increase FIM 81 (EUR 14) per month, if the spouse has no income of his/her own and the supplement was granted before 1.1.1996. The supplement is gradually reduced by one fifth a year starting from 1997 and will be abolished by 2001. Employment pension (Työeläke): No supplement. Children: National pension (Kansaneläke): No new supplements granted after 1.1.1996. Child increase FIM 105 (EUR 18) month/child, under the age of 16 if the supplement was granted before 1.1.1996. The supplement is gradually reduced by one fifth a year starting from 1998 and will be abolished by 2002. 6. Minimum pension No statutory minimum pension. 7. Maximum pension No statutory maximum pension. 8. Other benefits Pensioners' care allowance (Eläkkeensaajien hoitotuki): 3 categories: FIM 284 (EUR 48), FIM 708 (EUR 119) and FIM 1,415 (EUR 238) per month. Payable to compensate for costs arising from home care or other special expenses caused by illness or injury. Pensioners' housing allowance (Eläkkeensaajien asumistuki): May be awarded to a pensioner residing in Finland. The amount is proportional to the pensioner's income and housing costs and some other factors. Disability allowance (Vammaistuki) for non-pensioners: A special disability allowance is paid to 16-64 year old persons who are not in receipt of a pension but whose health is weakened through illness or injury to compensate for hardship, necessary services etc. The amount depends only on the degree of disability, being FIM 424 (EUR 71), FIM 990 (EUR 167) or FIM 1,839 (EUR 309) per month. Rehabilitation cash benefit (Kuntoutusraha) or rehabilitation allowance (Kuntoutustuki) is paid if the person is referred to rehabilitation. See "Rehabilitation".   Adjustment Adjustment National pension (Kansaneläke): Annually according to price changes. Employment pension (Työeläke): Annually according to the average of price and wage changes (TEL-index).   Accumulation with other social security benefits Accumulation with other social security benefits Only one pension from National Pension Scheme (Kansaneläke) may be paid. If combined with an employment pension (Työeläke) or employment injuries' or occupational diseases' pension, the national pension (Kansaneläke) is reduced. The employment pension (Työeläke) is secondary to the employment accident insurance benefit, and only the part of employment pension (Työeläke) in excess of the compensation under employment accident insurance is payable. The same applies to traffic insurance compensations. The disability pension (Työkyvyttömyyseläke) is not usually granted until the Sickness benefit has been paid for the maximum period. This does not apply to the individual early retirement pension.   Accumulation with earnings Accumulation with earnings National pension (Kansaneläke): If the pensioner takes up work similar to his former activity, he can no longer be considered as disabled and the pension is withdrawn. The pension can be suspended for 6 - 24 months if the pensioner finds employment. In the case of individual early retirement pension, same rules apply as for the employment pension (Työeläke). Employment pension (Työeläke): Within certain limits, the pensioner is allowed to work while receiving the pension. In the case of disability pension (Työkyvyttömyyseläke), if earnings are 40% but not 60% of the pensionable salary, the full disability pension (Työkyvyttömyyseläke) is changed to a Partial disability pension (osatyökyvyttömyyseläke). If earnings exceed 60% of the pensionable salary, the pension is withdrawn. In the case of individual early retirement pension, if earnings exceed FIM 1,206 (EUR 203) per month but do not exceed 3/5 of the pensionable salary, the full pension is changed to a partial pension. If earnings exceed 3/5 of the pensionable salary the payment of the pension is suspended for the working period.   Rehabilitation Rehabilitation To prevent disability, the pension institutions provide rehabilitation services. Before making the disability pension (Työkyvyttömyyseläke) determination, the pension institution has to make sure that the applicant's prospects of rehabilitation have been investigated. National pension (Kansaneläke): A rehabilitation allowance (Kuntoutustuki) for pensioners is payable when the period of rehabilitation lasts more than 30 days. The rehabilitation allowance is 10% extra to the amount of the pensioner's national pension (Kansaneläke). Employment pension (Työeläke): The rehabilitation cash benefit (Kuntoutusraha) amounts to the full disability pension (Työkyvyttömyyseläke) plus a rehabilitation increment of 33% for periods of active rehabilitation arranged by the employment pension institution.   Taxation and social contributions 1. Taxation of pension benefits Pensions are fully liable to taxation and taxed as other earnings (e.g. wages). However, small pensions are entitled to a special pension deduction. Thus if the income consists of national pension (Kansaneläke) only, no income tax is paid. See point 2 below. Disability Allowance (Vammaistuki), Pensioners' Care Allowance (Eläkkeensaajien hoitotuki) and Pensioners' Housing Allowance (Eläkkeensaajien asumistuki) are not taxed. 2. Limit of income for tax relief or tax reduction The amount of the full pension deduction for pension income per year is: Local taxes: single person: FIM 34,900 (EUR 5,870) married person: FIM 29,500 (EUR 4,962) Government taxes: FIM 23,200 (EUR 3,902): for all. When pension is higher than the full pension deduction amount, the deduction is reduced by 70% of the exceeding amount. Pension deduction = Full deduction - 70% (pension-full deduction) No deduction is given when the pension is higher than Local taxes: single: FIM 84,755 (EUR 14,255) married FIM 71,641 (EUR 12,049) Government taxes: FIM 56,341 (EUR 9,476). 3. Social security contributions from pension Sickness insurance premium for pensioners is 3.2% of taxable income.