Towards an Agile and Evidence-based Pension System

Ohto Kanninen () and Terhi Ravaska

No 40, Reports from Työn ja talouden tutkimus LABORE, Labour Institute for Economic Research LABORE

Abstract: The Labour Institute for Economic Research report “Towards an Agile and Evidence-based Pension System” examines the effects of the 2005 pension reform on retirement decisions. The study uses data from the Finnish Centre for Pensions (ETK) and Statistics Finland. The 2005 reform aimed to increase the effective retirement age through a flexible retirement age range of 63–68. Before the reform, the statutory retirement age was 65, while the most common actual retirement age was 60. The reform strengthened incentives to continue working by increasing accrual rates for additional years of work. In terms of old-age pensions, the reform affected accrual rates, monthly pension levels, and the retirement age. A central objective in pension system reforms has been to extend working lives. Policy measures have included raising the retirement age, strengthening financial incentives to remain in work, and introducing flexible part-time retirement schemes. The study finds that statutory retirement age is the most important factor influencing retirement decisions. In the 2005 reform, changes in retirement age had a significantly stronger effect on retirement behaviour than changes in financial incentives. The report was produced in collaboration between the Labour Institute for Economic Research (LABORE) and the Finnish Pension Alliance TELA.

Pages: 29 pages
Date: 2019-10-24
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