Photo: Katri Lehtola
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A recent study by the Finnish Centre for Pensions (ETK) has revealed that a majority of Finns opting for partial early retirement continue to work as usual, without significant changes in their salary levels. Contrary to the expectation that partial retirement would lead to reduced working hours, only about one-fifth of those who took up this option actually decreased their work commitments.
The study, led by ETK researchers including Mia Hakovirta, Milla Salin, Eija Lindroos, and Mari Haapanen, monitored the income of retirees over a year following the start of their partial retirement. It was found that approximately 60% of salaried employees maintained, fluctuated, or even increased their earnings, indicating that they did not reduce their working hours post-retirement.
A smaller portion, about 20%, opted to continue working at a lower salary level, suggesting a reduction in their work engagement. This group potentially represents those who are using partial retirement as a transition phase towards full retirement.
The concept of partial early retirement was introduced with the hope of extending working careers, allowing employees to balance work and retirement flexibly. However, Ilari Ilmakunnas, a specialist researcher at ETK, noted that while a large segment does not reduce their work, overall, the scheme does not seem to significantly prolong careers. Prior research indicated that those who took partial retirement at 61 tended to move to full retirement earlier than others.
The study also found a notable difference in the usage of partial retirement between the public and private sectors. Public sector employees were more likely to continue working at the same or lower salary level, while private sector employees experienced more cessation or fluctuation in their earnings. This suggests that transitioning to part-time work might be more feasible in the public sector.
Moreover, the research highlighted different approaches to the partial retirement scheme. Three-quarters of the retirees opted to draw half of their accrued pension. Those who chose a 50% pension were particularly likely to stop earning during the observation period, possibly compensating for a significant drop in income. In contrast, those who chose a 25% pension often continued working at a lower salary level, indicating a more significant reduction in work.
This comprehensive study sheds light on the actual impact of partial early retirement on work patterns in Finland, challenging some of the initial assumptions about the scheme’s ability to extend working careers. It underscores the complexity of retirement decisions and the varied ways individuals approach the transition from work to retirement.
HT
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Source: www.helsinkitimes.fi
