If you plan to retire in the near future, consider how the indexes affect your pension

Retirement should be planned and timed based on one’s own situation. When planning one’s retirement, it is good to be informed about, among other things, what the lowest retirement age is, the size of one’s accumulated pension, how taxation will affect the final pension amount and how the earnings-related pension affects Kela benefits from Kela.     

If you are planning to claim a pension by the end of 2023 or during 2024, you should also pay attention to how the pensions index will affect your pension. 

According to an assessment by the Finnish Centre for Pensions, a person who retires on an earnings-related pension before the end of 2023 may receive a slightly higher index increment than a person who retires after the turn of the year. This applies to both the partial and the full old-age pension.

Earnings-related pension index may favour retirement in 2023 

Two indexes affect earnings-related pensions: the earnings-related pension index and the wage coefficient. The aim of the earnings-related pension index is to retain the purchasing power of pensions in payment. The wage coefficient applies to starting pensions. At the time of retirement, the wage coefficient adjusts career lifetime earnings to the level of the year in which the pension begins.  

The current estimate of the Finnish Centre for Pensions is that the earnings-related pension index will grow slightly more than the wage coefficient in January 2024. In this index situation, it may be slightly more favourable to retire before the year turns. 

If you are pondering the effects of the indexes on your pension, also pay attention to the benefits of continued working. It may be financially beneficial. If you postpone retirement, you get an increment for late retirement. If you work at the same time, you earn more pension for your work.   

Index situation affects mainly those born in the 1950s and 1960s

The upcoming index situation applies in particular if you plan to retire during the years 2023 or 2024. As a rule, this applies if you were born in or before August 1959. 

The index situation applies also if you are planning to retire on a partial old-age pension in 2023 or 2024. As a rule, this applies if you were born in or before November 1962. 

Stay updated on your pension via your pension provider’s web service 

Check the effects of the indexes on your pension this autumn via your own pension provider’s web service.  

The index changes will be taken into account in the pension calculators at Tyoelake.fi as of September 2023. 

The Ministry of Social Affairs and Health will publish the confirmed earnings-related pension indexes for 2024 at the end of October.  

No further actions needed if you’re already receiving an earnings-related pension  

If you have already retired, your pension will automatically be increased with the earnings-related pension index at the beginning of 2024. In other words, you don’t have to apply for the increase. 

Claim your pension in time 

Claim your pension at least one month before retiring. If you are in an employment relationship, bear in mind that your employment must have ended before your old-age pension can begin. If you are self-employed, however, you don’t need to close down your business in order to receive your old-age pension. 

If you draw a partial old-age pension, you don’t have to resign from your employment. 

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