Updated pension calculator takes into account how earnings grow

The updated pension calculator takes into account the general growth in earnings in Finland, that is, the change in the average earnings of wage earners. Taking into account the growth in earnings makes the results more realistic. 

In the updated calculator, you can select between two alternative developments of earnings growth: 

  • the general earnings level does not change at all, or  
  • the general real earnings grow by 1.5 per cent per year. 

The previous version of the calculator always assumed that the general earnings level and your individual earnings don’t change in the future. You can select this alternative also in the updated calculator, and it corresponds to the pension assessment of your pension record. 

The assumption of the future growth in earnings used in the updated calculator corresponds to the long-term projections of the Finnish Centre for Pensions. In the baseline projection of the calculator, your real earnings grow by 1.5 per cent each year. 

The impact of inflation (the rise in prices) has been deducted from the real growth of earnings. A real growth of 1.5 per cent means that your wages will grow by 1.5 per cent more than the price level. 

General growth in earnings leads to higher pensions

The updated calculator takes into account the growth in earnings in two ways.  

First of all, the updated calculator takes into account how the general growth in earnings affects your future pension via the wage coefficient. When your pension starts, your wages and earnings from work throughout your working life are indexed with the wage coefficient to the level of the year in which you retire. The wage coefficient ensures that the pension you have earned throughout your working life retains its value. Without the wage coefficient, your pension amount would be more modest.  

Second, the development of your earnings is tied to the selected general growth of earnings. In the updated calculator, your earnings are assumed to grow each year in line with the wage coefficient.  

To illustrate how the earnings grow, the updated calculator includes information on how much your last wage before retirement will be if the general earnings level grows as projected. In addition, the calculator will tell you the replacement rate, that is, how much your pension is relative to your wage before retirement. 

National pension amount if you have turned 55

Contrary to the previous version of the calculator, the updated calculator also tells you how much national pension you are entitled to get if you have turned 55 and have earned no or only a small earnings-related pension. In the latter case, the calculator shows also your total pension (the earnings-related, national and guarantee pensions combined). 

You can use the updated pension calculator to estimate the amount of your old-age pension only. The calculator does not calculate partial old-age pensions or disability or years-of-service pensions. 

Pension amount in current prices

The calculator presents your pension amount and your estimated wage at the end of your working life in current prices, which makes it easier to relate the result to current prices. In other words, you do not have to take inflation into account. 

The calculator estimates your pension based on the wage that you enter into it and the currently valid laws. The result is as exact as possible when you also enter the amount of the pension pot you have earned so far. You can find that amount on your pension record. 

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