Longer careers are necessary, in particular, because the population is ageing and Finns live longer than before. An ageing population and longer life spans increase the costs of care and pensions. In 2011 there was one elderly person for four people of working age. It is predicted that in 2050, the ratio will be two elderly persons for four people of working age. A good illustration of the increased life expectancy is that about half of the girls born now are predicted to reach the age of 100 years.

Life expectancy of a 62-year-old person 1950-2075

Longer careers also have a positive effect on the earnings-related pension system. However, the sustainability of the pension system is not the main reason why longer careers are being talked about. We need longer careers because:

  • The population is ageing and life spans are getting longer: society needs more tax revenue to finance welfare services.
  • For an individual employee, a longer career means a better pension: longer careers are the cornerstone of adequate pensions in the future.
  • Longer careers also have a positive impact on the sustainability of the earnings-related pension system, but will not solve it alone. For the financing of earnings-related pensions, it is more important that pension contributions and pension benefits reach a balance in the long term.

Solutions for careers and pensions are needed also in the future

The objective: Raising the expected effective retirement age

In 2014 the average age of people retiring on an earnings-related pension was 60.5 years. Two out of three retire directly on an old-age pension. The rest either retire on a disability pension or take the unemployment pathway to retirement.

In particular, the great number and early start of disability pensions lower the average effective retirement age. The average age of people retiring on a disability pension was only about 52.0 years in 2014.

The effective retirement age of Finns has been on the rise. The effective retirement age has risen roughly as expected when the pension reform of 2005 was being planned. Nevertheless, reaching the target of 62.4 years is challenging and is unlikely to succeed without further measures.

The extending of careers depends on many factors during the whole work history. Measures will be needed for the beginning, middle and end of careers. In particular, better employment and measures maintaining work ability are needed. The pension system is just one means among many others.