Due to the major increase in the price levels in the past months, the earnings-related pension index for 2023 is exceptionally estimated to be significantly higher than the wage coefficient. This means that retiring no later than on 1 December 2022 may result in a pension that is higher than a pension starting on 1 January 2023.
- If you retire on 1 December 2022, earned income affecting your pension is adjusted by using the 2022 wage coefficient. The earnings-related pension index for 2023 increases the amount of pension paid to you as of 1 January 2023.
- If you retire on 1 January 2023, the earned income affecting your pension is adjusted by using the 2023 wage coefficient. In this case, the earnings-related pension index for 2023 is not applied.
The indices for 2023 are not yet available. The projection of the earnings-related pension index is around 6.8 per cent. The wage coefficient, on the other hand, is expected to grow by 3.8 per cent.
The Ministry of Social Affairs and Health confirms the indices by the end of October.
In early November, after the indices have been confirmed, you can log in to our online service to calculate your estimated pension based on the new indices.
Who have the choice to decide on when to retire?
Deciding whether to retire in December or January is possible in the following situations:
- You reach your minimum pensionable age no later than in November. A prerequisite for receiving old-age pension is that your employment ends. For this reason, please consider your notice period when you decide on retirement. Entrepreneurs are not required to end their entrepreneurial activities.
Partial old-age pension
- You reach the minimum age for partial old-age pension no later than in November or
- you already receive partial old-age pension, and you want to change the amount of pension from 25% to 50%.
- You turn 63 no later than in November.
The possibility to decide on the start date may also apply to persons going on partial disability pension if they have already received a preliminary decision and to persons starting vocational rehabilitation.
The earnings-related pension index is used to adjust any paid pensions
Earnings-related pensions are calculated by using two indices: the wage coefficient and earnings-related pension index.
The wage coefficient is used for calculating the pension for a retiring person. Wages and confirmed income for your working career are adjusted to the level of the year when the pension starts by using the wage coefficient. In the wage coefficient, changes in wage-earners’ income level are given a weighting of 80 per cent, whereas changes in consumer prices are given a weighting of 20 per cent.
During retirement, the amount of your pension is adjusted on an annual basis in January based on the earnings-related pension index. In the earnings-related pension index, the weight of changes in consumer prices is 80 per cent, whereas the weight of changes in the income level is 20 per cent.
The percentage increases are the same for everyone regardless of the amount of earned income and pension, but the euro amount depends on the amount of earned income and pension.
The article was uppdated 14 October 2022 (the estimated growth of the indices).
News release by the Finnish Centre for Pensions