Pension funds for social security benefits and child care

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 17,480.28 euros (in 2018) before you retire.

The pension funds that you accrue for earnings-related social benefits are based on the income that your social security benefit in question is based on. Depending on the type of social security benefit you are receiving, the proportion of earnings from work that your pension funds will be based on varies between 55 and 117 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 117%
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 65%
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 21.5
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 = €30,232.56

€30,232.56 x 75% = €22,674.42

€22,674.42 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 received a daily allowance.

Pension for child care at home

You accrue pension funds for periods of taking care of your own children under the age of three. Pension accrues for both the parental allowance and the child home care allowance.

During periods of the parental allowance (that is when you are on a maternity or a paternity leave), you accrue an earnings-related pension based on the earnings you had before going on the parental leave, increased by 17 per cent.

If you have no income from work, you will accrue pension funds for your parental leave as if you had earned a monthly salary of 728.34 euros per month (in 2018).

If you stay at home after the period of your parental leave and care for you child under the age of three, you will accrue pension funds for the child home care allowance. Your pension will be based on a fixed income of 728.34 euros per month (in 2018).

You will accrue pension funds for period of the child home care allowance until your youngest child turns three years.