An increase for pension recipients and rehabilitees in January
The earnings-related pension index is used to adjust any earnings-related pensions to be paid that have started no later than on 1 December 2023. The increase will be made automatically and there is no need for any separate applications. The earnings-related pension types to be increased are:
- old-age pension
- partial old-age pension
- disability pension, partial disability pension, cash rehabilitation benefit, partial cash rehabilitation benefit
- rehabilitation allowance
- years-of-service pension
- survivors’ pensions, that is: surviving spouse’s pension and orphan’s pension.
Are you considering retirement? You can estimate your future pension in Varma Online Service
You can estimate your future pension in Varma Online Service if you have not applied for pension yet. You can calculate an estimate based on the new indices as of 28 October in Varma Online Service.
Retiring at the latest on 1 December 2023 may result in a pension that is somewhat higher than a pension starting on 1 January 2024. The underlying reason is that, due to the increase in the price levels, the earnings-related pension index for 2024 is slightly higher than the wage coefficient. The wage coefficient is used in the calculation of future earnings-related pension.
If you are planning to retire at the turn of the year, please note the following:
- If you retire on 1 December 2023, earned income affecting your pension will be adjusted by using the 2023 wage coefficient. The earnings-related pension index for 2024 will increase the amount of pension paid to you as of 1 January 2024.
- If you retire on 1 January 2024, the earned income affecting your pension will be adjusted by using the 2024 wage coefficient when calculating your pension. In this case, the earnings-related pension index for 2024 will not be applied.
If you plan to retire on old-age pension, please note that 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.
Old-age pension can start at the earliest at the beginning of the month following the date when you reach your pensionable age. For example, if you reach your pensionable age on 1 December 2023, old-age pension can start at the earliest on 1 January 2024.
You can also work while on old-age pension.
Higher wage coefficient increases the accrued pension amount
In 2024, the wage coefficient increases more than in previous years. The wage coefficient increases the euro amount of your accrued pension when you have not yet retired.
You earn more pension if you continue at work. After you have reached your pensionable age and continue to work, you will be entitled to an increase for late retirement in addition to your accrued pension. Moreover, please note that wages are usually higher than pension.
Earnings-related pensions are calculated by using two indices
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 in accordance with 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.