Pension changes at the turn of the year

In this news article, you can find a summary of earnings-related pension changes that will take place at the turn of the year.

Pensions will rise by 6.8 per cent as of the beginning of the year

Earnings-related pensions payable in 2023 will be increased by the earnings-related pension index by approximately 6.8 per cent when compared to 2022. The earnings-related pension index is used to adjust any earnings-related pensions to be paid that have started no later than 1 December 2022. The earnings-related pension types to be increased are: old-age pension, partial old-age pension, disability pension, partial disability pension, cash rehabilitation benefit, rehabilitation allowance, years-of-service pension and survivors’ pensions (surviving spouse’s pension and orphan’s pension).

No separate index adjustment application is required, as we will automatically increase pensions in January.

Read our news release for more information on the index change.

Pension for January will be paid on 2 January. Check the payment dates of all monthly pensions next year in the payment date calendar.

Pension taxation

The Tax Administration delivers the tax rates for 2023 to Varma automatically. This means that our pension recipients do not need to send their tax cards to us. Pension that started on 1 November 2022 or on 1 December 2022 are exceptions: in these situations, the pension recipients themselves must request tax cards for both 2022 and 2023. The Tax Administration will send the requested tax cards to Varma.

Our rehabilitation customers must request a new tax card annually and the Tax Administration then sends the tax card to Varma.

Starting from February, we will withhold tax from pensions in accordance with the 2023 tax rate provided by the Tax Administration. As a result of this, the amount of pension paid into your account may change at the beginning of February. In our online service, you can check the amount of pension that will be paid into the account in February.

If you want to raise the tax rate provided by the Tax Administration, you can do this yourself when you log in to our online service. You can also inform our Pension Payment Services of the rate raise by phone. Inform us of the changes at the latest by 24 January 2023 to have them apply to the February pension.

Letters to pension customers at the turn of the year

The letters to our pension customers will be available in our online service before Christmas. Pension recipients will also receive the turn-of-the-year letter by post in December. In the letter, you will find next year’s pension amount and the pension payment dates. In addition, the letter will show the total amount of pensions paid and the amount of tax withheld. The letter will also provide residence report confirmation instructions for pension recipients living abroad.

Read more about the online services for pension recipients

New age groups within the scope of different pension types

Old-age pension will become possible for those born in 1959 as they reach their minimum retirement age, 64 years 3 months. For a person born in January 1959, old-age pension may thus start on 1 May 2023.

Those born in 1962 will be eligible for partial old-age pension as they turn 61.

Use the pension calculator to check your own retirement age for old-age pension and partial old-age pension.

Years-of-service pension will be possible for those born in 1960 starting from the age of 63. You can apply for a preliminary decision on years-of-service pension three months before you plan to start your retirement.

Information about different pension types

Wage coefficient

The wage coefficient used in the calculation of earnings-related pension will be 1.558 in 2023, which means that it will increase by approximately 3.8 per cent.

When you retire, the wage coefficient is used to adjust the wages and confirmed income for your working career to the level of the year when your pension starts.

Life expectancy coefficient

The life expectancy coefficient has been confirmed for those born in 1961. A coefficient of 0.94419 will be used to adjust the pension amount to the rising life expectancy.

Changes to the prerequisites for vocational rehabilitation

The prerequisites for applying for vocational rehabilitation will change at the start of 2023.

New requirements:

  • Rehabilitation must enable the person to continue working.
  • There is earned income for the 36 months preceding the rehabilitation application or the person was not gainfully employed during this time due to caring for a child younger than three years or due to caring for an adopted child older than three years.

Further prerequisites for rehabilitation are an illness or disability that could result in incapacity for work in the next few years, and earned income amounting to at least EUR 39,157.84 for the past five years.

Prerequisites that will no longer apply

  • You work or it has been less than 2.5 years since you stopped working.
  • You have at least around five years of professional experience or work experience.

Read more about rehabilitation.

Employee’s pension contribution

Employee’s pension contribution will remain unchanged in 2023, with the amount being

  • 7.15 per cent for employees under 53 years of age
  • 8.65 per cent for employees aged 53–62
  • 7.15 per cent for employees aged 63 or older.

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