The Finnish Pension Reform of 2005
A major reform in the Finnish private-sector earnings-related pension system came into effect on January 1st, 2005. It was negotiated in 2001 2002 between the central organisations of employers and trade unions and representatives of the central government. This paper describes the reform and analyses its effects on selected macroeconomic variables, on the pension system and on the position of different birth cohorts and different educational groups. The reform appears to be successful in many respects. It simplifies the private-sector pension system and makes it a model that other pension systems in Finland will converge to. The reform rewards postponing retirement. It curbs the increase in contribution rate without endangering the adequacy of replacement rates. The increase in labour supply will have beneficial welfare effects. The new system also responds rather well to uncertain future demographics. Despite this apparent success of the reform there remains a serious doubt of its adequacy, as contribution rates are still expected to rise by several percentage points.
|Date of creation:||2006|
|Date of revision:|
|Contact details of provider:|| Postal: Lönnrotinkatu 4 B, FIN-00120 HELSINKI|
Phone: +358 (0)9 609 900
Fax: +358 (0)9 601 753
Web page: http://www.etla.fi/
More information through EDIRC
|Order Information:|| Email: |
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Seija Ilmakunnas & Mervi Takala, 2005. "Promoting Employment among Ageing Workers: Lessons from Successful Policy Changes in Finland," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 30(4), pages 674-692, October.
- Kotlikoff, Laurence J & Smetters, Kent A & Walliser, Jan, 1998.
"Social Security: Privatization and Progressivity,"
American Economic Review,
American Economic Association, vol. 88(2), pages 137-41, May.
- Fehr, Hans, 2000.
" Pension Reform during the Demographic Transition,"
Scandinavian Journal of Economics,
Wiley Blackwell, vol. 102(3), pages 419-43, June.
- Lassila, Jukka & Valkonen, Tarmo, 2001. "Ageing, Demographic Risks, and Pension Reform," Discussion Papers 765, The Research Institute of the Finnish Economy.
- Alho, Juha M. & Hougaard Jensen, Svend E. & Lassila, Jukka & Valkonen, Tarmo, 2005. "Controlling the effects of demographic risks: the role of pension indexation schemes," Journal of Pension Economics and Finance, Cambridge University Press, vol. 4(02), pages 139-153, July.
When requesting a correction, please mention this item's handle: RePEc:rif:dpaper:1000. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kaija Hyvönen-Rajecki)
If references are entirely missing, you can add them using this form.