A nurse helping an elder in their home in Helsinki. LEHTIKUVA
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Despite having one of the highest average pensions in Europe, over half of pensioners in Finland say their income is not enough to meet basic needs, according to a survey by pension insurer Ilmarinen.
The average statutory total pension in Finland was €1,869 per month in 2023.
For pensioners living in Finland who receive a pension based solely on their own work history, the average was slightly higher at €1,977 per month. However, after paying essential expenses, survey respondents reported having just €500 a month left for other costs.
In the Ilmarinen survey, 52 percent of respondents said their pension did not cover the cost of living. This marked a rise from 44 percent the previous year. Only one-third felt their pension was currently adequate.
The survey, conducted in December and January, gathered responses from over 1,000 pension recipients. The participants had been retired for periods ranging from a few months to over five years.
Jouni Vatanen, a researcher at Ilmarinen, said the financial pressures reflect Finland’s current economic climate, including cost-cutting measures, employment trends, and broader public sentiment. He said more emphasis is needed on financial preparation during working life and finding ways for willing and able pensioners to access part-time work.
According to Eurostat data, the average Finnish pension is higher than the EU average when measured in both euros and purchasing power. In 2021, the average old-age pension in Finland was €1,700, or approximately €1,300 in terms of purchasing power. The figure remains above the European average, though international comparisons are difficult due to differing pension systems and the absence of occupational pensions in the data.
Pension income also varies by type. In 2023, those on earnings-related old-age pensions received the highest average of €2,068 per month. The average disability pension was €1,282. Pensions paid abroad and survivors’ pensions were significantly lower, reducing the overall average.
Men’s pensions remain substantially higher than women’s. In 2023, the average earnings-related pension was €2,188 per month for men and €1,542 for women. The difference, €646, is attributed to men’s longer working lives and higher average wages. When national and survivors’ pensions are included, the gender gap in total pensions narrows to €472, with men receiving €2,297 and women €1,825 per month.
For new retirees in 2023, the average earnings-related pension was €1,722 per month. This figure is lower than the average for all pensioners, reflecting the continued adjustment of pensions in payment through indexing.
In relation to wages, the average old-age pension still replaces just over 50 percent of pre-retirement earnings. However, for disability pensions, the replacement rate has dropped by 14 percentage points since 2000, now standing at about 33 percent of the average wage.
The rising concern among pensioners contrasts with the statistical improvements in average pensions over time. The Ilmarinen survey found that more than half of pensioners said their standard of living matched expectations, and 80 percent regularly monitored their financial situation. Yet many also expressed concern over financial literacy. Nearly 40 percent found investment-related decisions too complex, although over 30 percent felt confident in managing such matters.
Vatanen said that improving financial skills should begin earlier in life. “Financial literacy needs to be strengthened well before retirement so that more people are better prepared,” he said.
HT
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Source: www.helsinkitimes.fi
