Pension for social security benefits

You will receive pension funds for periods of social security benefits and the home care allowance. To receive pension funds for such periods, you must have received earnings from work at some point during your working life to an amount of at least 18 171.45 euros (in 2020) before you retire.

For periods on social benefits, pension accrues based on your annual earnings from work or your annual earnings under the Health Insurance Act used to calculate the social benefit in question. The share of earnings from work that entitles to pension varies depending on the benefit from 55 to 121 per cent.

You will accrue pension funds for the following social security benefits:

  • the earnings-related unemployment allowance;
  • the maternity, special maternity, paternity and parental allowance (the parental allowance can also be paid as a partial or minimum-level allowance):
  • the adult education subsidy;
  • the job alternation compensation;
  • the sickness allowance (also the partial sickness allowance);
  • the special care allowance;
  • the rehabilitation allowance; and
  • the compensation for loss of earnings based on workers’ compensation and motor liability insurance (also known as LITA compensation).

The basic unemployment allowance and the labour market support paid by Kela are not based on your earnings. That is why you will accrue no pension funds for these social benefits. However, they are taken into consideration when the projected pension component of the disability pension is determined.

The table below shows  you how  the most common social benefits contribute to your future pension.

Situation % of earnings taken into consideration
You become unemployed 75%
of the earnings that form the basis of the earnings-related unemployment allowance
You go on a parental leave 121%
of the earnings that form the basis of the parental allowance
You go on a job alternation leave 55%
of the earnings that form the basis of the compensation for alternation leave
You fall ill 62%
of the earnings that form the basis of the sickness allowance

 

How much pension funding you earn while receiving an earnings-related daily allowance
Number of days you have an allowance for 260
Monthly income that your daily allowance is based on (also called the basis for the allowance) €2,500
Number that your monthly income (the basis of the allowance) is divided by 21.50
Percentage of your income for which you will earn funding towards a pension 75%
Monthly amount of pension funds that you earn €2,500 ÷ 21.5 = €116.28

€116.28 x 260 days = €30,232.80

€30,232.80 x 75% = €22,674.60

€22,674.60 x 1.5% = €340.12

€340.12 ÷ 12 = €28.34

In this example, you will earn a monthly amount of pension funds of €28.34 for the period that you have got a daily allowance.
The earnings-related pension you have accrued will also be adjusted with the life expectancy coefficient determined for your age group.
How much pension funding you earn while receiving an earnings-related daily allowance
Number of days you have an allowance for 260
Monthly income that your daily allowance is based on (also called the basis for the allowance) €2,500
Number that your monthly income (the basis of the allowance) is divided by 21.50
Percentage of your income for which you will earn funding towards a pension 75%
Monthly amount of pension funds that you earn €2,500 ÷ 21.5 = €116.28€116.28 x 260 days = €30,232.80

€30,232.80 x 75% = €22,674.60

€22,674.60 x 1.5% = €340.12

€340.12 ÷ 12 = €28.34

In this example, you will earn a monthly amount of pension funds of €28.34 for the period that you have got a daily allowance.
The earnings-related pension you have accrued will also be adjusted with the life expectancy coefficient determined for your age group.

Calculate the impact of family leaves on your earnings-related pension. The calculator is available on page 8 “Pension for family leaves” in the section titled “How much pension”.