Earnings-related pensions are protected by the earnings-related pension index and the wage coefficient. The earnings-related pension index ensures that the purchasing power of pensions in payment is maintained. The wage coefficient ensures that the starting level of the pension has been reasonable relative to the earnings while working.
The amount of the index adjustment depends on the changes in the consumer price and earnings level indexes calculated by Statistics Finland.
As a rule, the wage coefficient increases clearly more than the earnings-related pension index. This year, the opposite will be the case. It follows that a person who retires in 2022 will get a higher index increment than a person who retires after the turn of the year, in 2023.
The earnings-related pension index will rise by 6.8 per cent and the wage coefficient by 3.8 per cent compared to 2022.
You should plan your retirement based on your own situation. Go to your pension provider’s website or contact your pension provider’s pension Customer Service for more information on how to plan your retirement.
When can I claim my pension?
To get the increase to your starting pension in line with the earnings-related pension index, your pension must start at the beginning of December 2022 at the latest. That means that you must claim your pension in November at the latest as your pension can start at the earliest at the beginning of the month following the month in which you have claimed your pension.
The earliest your old-age pension can start is at the beginning of the month following the month in which you reach your retirement age. If you reach your retirement age for the old-age pension in November at the latest, your pension can start at the beginning of December.
If you are a wage-earner, your employment relationship must have ended before your old-age pension can start. So take note of your period of notice. If you are self-employed, you don’t have to end your self-employment.
The retirement age for a partial old-age pension is 61 years. If you turn 61 in November 2022 at the latest, your partial old-age pension can start at the beginning of December.
Pension indexes 2021–2023
|Earnings-related pension index||2631
(change 0.5 %)
(change 2.3 %)
(change 6.8 %)
(change 1.3 %)
(change 2.5 %)
(change 3.8 %)
|National pension index||1639 (change 0.4 %)||1.1.-31.7.2022: 1674
(change 2.1 %). 1.8.-31.12.2022: 1733
|1805 (change 7.8 %)|
Earnings-related pension index affects earnings-related pensions in payment
All earnings-related pensions in payment are adjusted annually at the beginning of January with the earnings-related pension index (also called the pensioner’s index).
The earnings-related pension index raises all earnings-related pensions. In other words, it increases the old-age pension, the partial old-age pension, the disability pension and the rehabilitation benefit, the survivors’ pension (surviving spouse’s and orphan’s pensions), the years-of-service pension and the rehabilitation allowance for vocational rehabilitation.
The earnings-related pension index is used for the first time when a person has retired during the previous calendar year. For example, if you retire in 2023, your pension will be adjusted for the first time with the earnings-related pension index in January 2024.
The earnings-related pension index ensures that the purchasing power of pensions remains intact or is improved. In the earnings-related pension indexes, the change in price levels weigh 80 per cent and the change in wage-earners’ income levels weigh 20 per cent.
Example of index adjustment of pension in payment
In 2023, the pension recipient gets a pension of 1,600 euros a month. The pension is adjusted to the 2023 level by multiplying the pension with the 2023 earnings-related pension index and dividing it with the earnings-related pension index of the year before (2022): €1,600 x 2874 / 2691 = €1,708,81 /month.
|Year||Earnings-related pension index||Earnings-related pension €/month||Calculation formula|
|2023||2874||€1,708,81||€1,600 x 2874/2691 = €1708,81|
Wage coefficient ensures that earned pension retains its value
When you start drawing your pension, your pension provider indexes that wages and earnings that you have received during your working life with the wage coefficient to the level of the starting year of your pension.
This means that your earnings for each year are increased with the wage coefficient with as much as the value of the wage coefficient has changed from the year of earning the wage to the year in which you start drawing your pension. This way, the earnings you have made in different years will be at the same level, that is, at the level of the year in which your pension starts.
When your earnings have been increased to the level of the year in which you start drawing your pension, your pension amount will be calculated based on the earnings increased by the wage coefficient. The pensions you have earned before 2005 from different employments are also adjusted with the wage coefficient.
In the wage coefficient, the changes in prices weigh 20 per cent and the changes in wage-earners’ income weigh 80 per cent.
Kela adjusts national pensions in payment
Each year, Kela adjusts the national pensions in payment at the beginning of January according to changes in the national pension index. The indexation secures the purchasing power of national pensions in relation to changes in price levels. In addition to index adjustments, the level of the national pensions have been adjusted from time to time with a parliamentary decision.