The earnings-related pension indexes ensure that the starting level of your pension is reasonable and that the purchasing power of the pension you are paid remains intact. The earnings-related pension index and the wage coefficient protect earnings-related pensions.
The amount of the index adjustment depends on the changes in the consumer price and earnings level indexes calculated by Statistics Finland.
Pension indexes 2020–2022
|Earnings-related pension index||2617 (change 1.2%)||2631
(change 0.5 %)
|2691 (change 2.3 %)|
|Wage coefficient||1.446 (change 2%)||1,465
(change 1.3 %)
|1,501 (change 2.5 %)|
|National pension index||1633 (change 1%)||1639 (change 0.4 %)||1674 (change 2.1 %)|
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 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 2021, the pension recipient gets a pension of 1,600 euros a month. The pension is adjusted to the 2022 level by multiplying the pension with the 2022 earnings-related pension index and dividing it with the earnings-related pension index of the year before (2021): €1,600 x 2691 / 2631 = €1,636.49/month.
|Year||Earnings-related pension index||Earnings-related pension €/month||Calculation formula|
|2022||2691||€1,600 x 2691/2631 = €1,636.49|
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.