More working years by reducing the workload
Ageing employees and self-employed persons may reduce their
workload by transferring to part-time work. The part-time pension is a
favourable retirement alternative for both employee and employer. The experience
and skills of the employee who works part-time are still at the employer's
disposal, and the employee gets more free time.
Part-time working hours are determined based on what
constitutes full-time work. As full-time work is considered the working hours
established in the working conditions agreement. If you are self-employed, the
full-time working hours are calculated based on the YEL income on which
insurance contributions are paid. You may also retire on a part-time pension
while working several part-time jobs, if the combined number of working hours
per week is at least 35.
Persons already working part-time are usually not granted a
part-time pension. It is also not awarded to persons who are not in gainful
employment or who work only sporadically.
Entitlement to part-time pension
Those born before 1952 have been able to receive a part-time
pension from the age of 58. For those born in 1952 and later, the age limit is
60 years.
You could retire on a part-time pension if:
1) You have been working full-time for 12 months during the
last 18 months. This review period of 18 months may be prolonged by at most six
months if you, during this time, have received sickness allowance, salary
during periods of illness, loss of earnings compensation or daily allowance.
2) You have accrued earnings-related pension for at least five
years during the last 15 years; this includes work carried out in Finland, other
EU or EEA countries or countries with which Finland has concluded a social
security agreement.
3) You are not currently receiving any other pension. However,
survivors' and national pension are no hindrance to receiving part-time pension,
nor is pension paid out as a lump sum.
Requirements
The employee and the employer must both agree on the
employee's shift to part-time work. The employer has no obligation to arrange
part-time work, but you may also change jobs to do part-time work
for another employer or take up part-time self-employment.
When you shift to part-time work, your earnings need to
decrease to a sum between 35-70% of your stabilised earnings during full-time
work. The reduction in earnings needs to reflect the decrease in working hours.
Your personal earnings limit will be set as the pension begins.
If you are self-employed and considering part-time retirement,
you will need to halve your work efforts; in practice, your average YEL
income needs to be reduced by half. You may also quit your self-employment
and take up part-time employment instead. This should be negotiated
with your own pension provider.
Part-time work may be carried out in Finland or another EU
country.
There must not be any breaks in part-time work exceeding six
weeks. Annual leave or sick leave do not constitute such breaks,
whereas lay-offs do. If your part-time pension is cancelled due to la
ay-off, the earnings limit being exceeded, or for some other reason, the payment
of your pension may start again once the conditions for receiving it are again
being met.
The qualifying conditions for the part-time pension are mainly
the same in all fields. There are, however, differences in the details of the
part-time pensions of state and local government employees as compared with the
part-time pensions of private-sector employees. More detailed information is
available from the State Treasury and the Local Government Pensions Institution,
which also manages the pension provision of Church employees. There are also
some special features in the part-time pensions for self-employed persons and
seafarers. Further information is provided by the Farmers' Social Insurance
Institution (Mela) and the Seafarer's Pension Fund.
Accrual during part-time pension
For those born prior to 1953, pension is accrued from salary
received from part-time work as well as from the difference betwen stabilised
earnings and salary during part-time work, in other words the decrease in
income.
Pension is accrued from part-time work at a rate of 1.9% per
year until the age of 63. Following that, the accrual rate rises to 4.5% until
the age of 68 is reached. Pension from the decrease in income is accrued at
0.75% per year, regardless of age. For those born in 1953 and later, pension
only accrues from part-time work, not from the decrease in income.
For part-time pensioners born in 1946 or earlier, pension is
accrued from part-time work at a rate of 2.5% per year until the age of 65, and
the accrual rate for the decrease in income is 1.5%.
External links: The Farmers' Social Insurance
Institution, the
Seafarer's Pension Fund, the Local Government
Pensions Institution, the State
Treasury