Reforming pension systems: the Finnish example

Statutory pensions systems are faced with the challenge of increasing life expectancy. In Finland the earning- related pension system has gone through major reform. 

This reform entails an adaptation of both retirement ages and the pension formula to the increase of life-expectancy. The Finnish example has been underlined by the European Commission’s Annual Employment and Social Developments Review as a way to provide an incentive to work longer. Mikko Kautto from the Finnish Centre for Pensions (ETK) sets out the principles, motivations and outcomes of the automatic adjustment mechanisms in this article.