Effective Retirement Age in 2015 Jari Kannisto Development Manager 11 Feb. 2015

ETK/Kannisto Jari Content Number of new retirees on an earnings-related pension Development of effective retirement age Employment Working life expectancy Finnish Centre for Pensions2 Kannisto Jari

ETK/Kannisto Jari Monitoring the aim to postpone the effective retirement age Expected effective retirement age – corresponds, in principle, to life expectancy – depicts the average effective retirement age if the retirement and mortality rates remain on the level of the statistical year – independent of the demographic age structure Employment rate of the elderly Working life expectancy – depicts the number of years in which a person at a certain age can be expected to be in an employment relationship or work as a self-employed person during his or her remaining life span – based on a method that uses cross-sectional data on the probability of death rates, labour force participation rates and employment rates. Finnish Centre for Pensions3 Kannisto Jari

ETK/Kannisto Jari Effective retirement age in 2015 Effective retirement age – 61.1 years (expected effective retirement age for a 25-year-old) – 62.8 years (expected effective retirement age for a 50-year-old) Minor change to effective retirement age – the expected effective retirement age for a 25-year-old fell by 0.1 years compared to 2014 – the expected effective retirement age for a 50-year-old was the same as in 2014 Decreasing number of pension contingencies at age before the earliest eligibility age for old-age retirement Finnish Centre for Pensions4 Kannisto Jari

ETK/Kannisto Jari New retirees on an earnings-related pension 2006–2015, by pension type Part-time pension* Special pension for farmers Unemployment pension Disability pension Early old-age pension Old-age pension Finnish Centre for Pensions5 74,048 persons retired on an earnings-related pension (excl. part-time pensions) in ,324 persons retired on an earnings-related pension (excl. part-time pension) in * Persons retiring on a part-time pension are not included in the figure of new retirees. Kannisto Jari

ETK/Kannisto Jari New retirees on an earnings-related pension, by age Finnish Centre for Pensions6 Kannisto Jari

ETK/Kannisto Jari Expected effective retirement age, all new retirees on an earnings-related pension Finnish Centre for Pensions 7 Kannisto Jari

ETK/Kannisto Jari Proportion of new retirees on an earnings- related pension of all insured, 25–49-year-olds Finnish Centre for Pensions8 Kannisto Jari

ETK/Kannisto Jari Proportion of new retirees on an earnings- related pension of all insured, 50–69-year-olds Finnish Centre for Pensions9 Kannisto Jari

ETK/Kannisto Jari Retirement on an earnings-related pension (1/2) 74,048 persons retired on an earnings-related pension (3,700 more than in 2014) Number of new retirees on an old-age pension rose by 8 per cent – more than 54,800 persons retired on an old-age pension – more than 70% of all new retirees retired on an old-age pension Number of new retirees on a disability pension declined by slightly less than one percent compared to 2014 – 18,600 people retired on a disability pension. Finnish Centre for Pensions10 Kannisto Jari

ETK/Kannisto Jari Retirement on an earnings-related pension (2/2) No major changes in the number of new part-time pension retirees – 3,700 persons retired on a part-time pension (3,400 in 2014) – Age limit for persons born in 1954 and 1955 is 61 years – Part-time pensions may be granted in 2016, but no longer in 2017 Small changes in number of starting pensions – More starting pensions among young and above-63-year-old women than men Finnish Centre for Pensions11 Kannisto Jari

ETK/Kannisto Jari Expected effective retirement age: aim and realisation Aim agreed on in 2009: 62.4 years by 2025 For a 25-year-old Finnish Centre for Pensions12 Expected effective retirement age To achieve the goal at an even pace, the following is required: -an annual rise of almost 0.2 years as of the level in an annual rise of 0.1 years as of the level in The effective retirement age has risen particularly because the unemployment pension was abolished and the number of new disability pensions has dropped. Kannisto Jari

ETK/Kannisto Jari Future (1/2) Finnish Centre for Pensions13 For the main part, the direct effects of the legislative amendments of the 2005 pension reform can now be seen in the effective retirement age – the effective retirement age has risen – it is too early to assess the impact of the life expectancy coefficient at this point Future development depends on changes in behaviour – the retirement intentions have been extended – many different factors affect the decision to retire Kannisto Jari

ETK/Kannisto Jari Future (2/2) Future development depends on economic outlook Future development depends on working life improvements In 2016, the number of new retirees will be slightly smaller than in 2015 Finnish Centre for Pensions14 Kannisto Jari

ETK/Kannisto Jari Eläketurvakeskus15 Employment rates of the working-age population (15–64 yrs), the young (25–34 yrs) and the elderly (55–64 yrs) in 2003–2015 Source: Labour Force Surveys 2003–2015, Statistics Finland Finnish Centre for Pensions15 Kannisto Jari

ETK/Kannisto Jari Employment rates for 55–59-year-olds and 60–64-year-olds in 2003– –59-year-olds 60–64-year-olds Source: Labour Force Surveys 2003–2015, Statistics Finland Employment rates in 2015: 55–59-year-olds 74.8% and 60–64-year-olds 45.3% Employment rates in 2014: 55–59-year-olds 74.1% and 60–64-year-olds 44.3% Finnish Centre for Pensions16 Kannisto Jari

ETK/Kannisto Jari Employment rates for 55–67-year-olds in 2002, 2007, 2014 and 2015 Finnish Centre for Pensions17 Source: Labour Force Surveys 2003–2015, Statistics Finland Kannisto Jari

ETK/Kannisto Jari Finnish Centre for Pensions 18 Unemployment rates for 55–59- and 60–64-year-olds in 2003– –59-year-olds 60–64-year-olds Source: Labour Force Surveys 2003–2015, Statistics Finland Employment rates in 2015: 55–59-year-olds 8.2% and 60–64-year-olds 7.7% Employment rates in 2014: 55–59-year-olds 7.2% and 60–64-year-olds 7.3% Kannisto Jari

ETK/Kannisto Jari Source: Eurostat, Employment, Labour Force Surveys Finnish Centre for Pensions19 Average employment rates of 55–64-year- olds in Nordic and EU countries in 2003–2014 Kannisto Jari

ETK/Kannisto Jari Age-cohort differences must be taken into account in relation to the employment development of the elderly (55–64-year-olds) (1/2) Overall employment rate has not improved since the post-financial-crisis level – employment rate of working-aged population in 2015: 68.1% (decrease 0.2 percentage points since 2014) – favourable employment development of the elderly in recent years – employment rate of 55–59-year-olds record high in statistical history (74.8%) – employment rate of 60–64-year-olds record high in statistical history (45.3%) – employment rate of 25–34-year-olds decreased as of 2008 by 6.3 percentage points (74.8% in 2015) Finnish Centre for Pensions20 Kannisto Jari

ETK/Kannisto Jari Age-cohort differences must be taken into account in relation to the employment development of the elderly (55–64-year-olds) (2/2) Finland lags behind the other Nordic countries regarding the employment of the elderly in 2014 – Closest to Finland is Denmark, which is a few percentage points ahead of Finland – the gap has grown – The EU27 countries lag behind Finland by 7.2 percentage points Finnish Centre for Pensions21 Kannisto Jari

ETK/Kannisto Jari Expected length of working life for a 15-year-old 2001–2015 Finnish Centre for Pensions22 Kannisto Jari

ETK/Kannisto Jari Working life expectancy for a 15-year-old 2001–2015 Finnish Centre for Pensions 23 Kannisto Jari

ETK/Kannisto Jari Length of working life The expected labour force participation in 2015 was 37.5 years – an increase of 0,3 years from the previous year – an increase of 2.4 years in the 2000s The working life expectancy in 2015 was 33.9 years – as in 2014 – 33.9 years for males (decrease of 0.1 years compared to 2014) – 33.8 years for females (as in 2014) The working life expectancy has increased by 2.4 years in the 2000s – males: an increase of 1.5 years – females: an increase of 3.2 years Finnish Centre for Pensions24 Kannisto Jari