The trend in life expectancy taken into consideration as from 2010

The life expectancy coefficient will reduce the old-age pensions of people born in 1948 and later, if average life expectancy increases.

A specific life expectancy coefficient will be calculated for each age group in the year that they reach 62 years of age. The coefficient is based on the mortality figures maintained by Statistics Finland for the five preceding years. The coefficient is determined by comparing life expectancy for each age group with that for people born in 1947.

The old-age pension is multiplied by the coefficient specific to your age group regardless of the age when you will retire. If retirement age is less than 62 years, the coefficient for the year concerned is applied.

The coefficient has a minimal effect at first, and the reduction it causes can be compensated for by working for a longer time.

The purpose of the life expectancy coefficient is that part of increased life expectancy is spent in continuing to work. The coefficient works both ways in that if life expectancy shortens, monthly pensions will increase. 

If your old-age pension begins before 1 January 2010, the life expectancy coefficient will not be applied. Similarly, if you were born prior to 1 January 1948, the life expectancy coefficient will not be applied to your pension.

Life-expectancy coefficient will also have an effect on disability pensions starting in 2010

The idea behind the life expectancy coefficient is that part of the increased life expectancy of the general population be used to extend the number of years in the workforce; as a result, the level of one’s pension can be improved by working longer. But for those who start drawing disability pension at a young age, this is not possible. Thus, the life expectancy coefficient is applied only to that portion of accumulated pension that was earned before the recipient started drawing disability pension. The coefficient is not applied to that portion of the pension based on projected pensionable service (the period between onset of disability and reaching retirement age).

In addition, for those drawing disability pension, the coefficient is less severe than what it would be if calculated based on the year of recipient’s birth. For new disability pensions, the portion of pension already earned is multiplied by the coefficient established for those who have turned 62 during the year of the onset of disability. It is not, thus, the coefficient applied to the disabled person’s own age group. This means that the younger a working person becomes disabled, the smaller the effect of the coefficient on his or her pension. This disability pension is not adjusted according to a new life expectancy coefficient when the recipient converts to old-age pension.

In converting from disability pension or unemployment pension to old-age pension, the pension is not adjusted according to a life-expectancy coefficient.