Pension Provision for Employees and the Self-employed

Transcription

1 2015 Pension Provision for Employees and the Self-employed WHEN CAN I DRAW EARNINGS-RELATED PENSION? HOW IS MY PENSION FORMED? Finnish Centre for Pensions ELÄKETURVAKESKUS

2 Finnish Centre for Pensions Service centre for the Finnish statutory earnings-related scheme Customer service and visiting address: Kirjurinkatu 3, Itä-Pasila, Helsinki Postal address: FI ELÄKETURVAKESKUS, Finland Telephone: Pensions advice: International matters: Insurance of work abroad: Fax: Booklets published by the Finnish Centre for Pensions Earnings-related Pension Provision for Employers and the Self-Employed (in Finnish, Swedish and English) Pension Provision for Employees and the Self-employed (in Finnish, Swedish and English) Applying for Pension from Abroad (in Finnish, Swedish, English, Russian and Estonian) The booklets are free of charge and available from the Finnish Centre for Pensions, Kela, Employment and Economic Development Offices, as well as the Centre for Economic Development, Transport and the Environment.

3 Introduction 5 Private sector earnings-related acts 6 Pension accrual from earnings from work 6 Pension accrual for unsalaried periods 6 Life expectancy coefficient 6 Pensions based on age 7 Retire flexibly on an old-age 7 Early old-age 7 Old-age for the long-term unemployed aged 62 8 Deferred old-age 8 Converting other into old-age 8 Amount of old-age 9 Easing the load by retiring part-time 9 Right to part-time 10 From full-time work to part-time retirement 10 Requirement for part-time work 10 Amount of part-time 11 Part-time in the event of a lay-off 11 Reapproval of part-time 12 Becoming disabled or unemployed 12 Security when your work ability weakens 12 Vocational rehabilitation 13 Income during rehabilitation 13 Rehabilitation allowance 13 Rehabilitation allowance paid to the employer 14 Rehabilitation assistance 14 Rehabilitation costs 14 Pensions based on disability 14 Disability 14 Partial disability 15 Assessment of disability 15 Amount of disability 16 Component for projected able service 16

4 Security in the event of unemployment 17 Right to old-age at age 62 for the unemployed 17 Survivors security for surviving spouse and children 17 Surviving spouse s right to survivors 17 Children s right to survivors 18 Determining survivors 18 Amount of surviving spouse s 18 Amount of orphan s 19 Payment of survivors 19 Other security for the family 19 Apply for your 20 Pension decision 21 Payment of 21 Lump-sum payment and increment for delays 21 Changes in and interruptions to payments 21 Pension from abroad and Appendix U 22 Pensions are taxable income 22 Working while drawing a 23 National alongside small earnings-related 23 Guarantee 24 Kela s child increase 24 Pension reform Check your record 25 SUPPLEMENT

5 Pension Provision for Employees and the Self-employed Introduction The Finnish system consists of employment-based earningsrelated s, the residence-based national and the guarantee. Earnings-related s are managed by authorised providers, funds and, in the public sector, by Keva. The residencebased and the guarantee are managed by Kela. Statutory earnings-related insurance offers security when you retire, if you become disabled or if the breadwinner in your family dies. Earnings-related accrues on the basis of employment and selfemployment. In addition, accrues for the unemployment daily allowance as well as for studies that lead to a degree or a qualification, and for periods of home care of a child under the age of three. If your earnings-related is small, you may be entitled to a national and a guarantee. For further information on these benefits, please contact Kela. This booklet contains information on private-sector benefits and the preconditions for receiving them under currently valid legislation. The benefits are the same for employees and selfemployed persons, but the benefits of farmers and seafarers contain special features which may deviate from other private sector s. For more information on farmers s, please contact Mela, and for seafarers s, the Seafarer s Pension Fund. There are some differences between private and public sector s. For more information, please contact Keva, which handles the provision of local government, state, Church and Kela employees. This booklet also provides information on how accrues and how you can apply for. The Supplement at the end contains information on insurance contributions, indexes and taxation in It also features tables on the national, the reduced surviving spouse s, the allocation of survivors, as well as social benefits for which accrues. All amounts in this booklet are in the index level of This booklet presents the general features of the system. The text should not be considered a legal text. For more information on personal matters, please turn to your own provider or the Finnish Centre for Pensions. More information in English on the forthcoming reform that will take effect in 2017, is available at reform_in_2017/1504/.

6 6 Pension Provision for Employees and the Self-employed 2015 Private sector earnings-related acts Work carried out under an employment contract is insured under the Employees Pensions Act (TyEL). Seafarers working on board a vessel in international traffic are insured according to the Seafarer s Pensions Act (MEL). The Farmers Pensions Act (MYEL) covers farmers, reindeer herders and fishermen, as well as researchers and artists receiving grants. Other self-employed persons arrange their insurance under the Self-Employed Persons Pensions Act (YEL). Freelance work is covered by either TyEL or YEL. Pension accrual for earnings from work If you are an employee, your is calculated per calendar year based on your annual earnings and an agegraduated accrual rate. If you are selfemployed, your annual earnings are your total earnings for each calendar year. Pension accrues annually according to your age as follows: at 1.5 per cent between the ages of 18 and 52 at 1.9 per cent between the ages of 53 and 62 at 4.5 per cent between the ages of 63 and 67. You will also accrue for work or self-employment carried out while drawing a and for insured self-employment until the age of 68. For employment while drawing an old-age or a disability, you will accrue new at a rate of 1.5 per cent, regardless of your age. The accrual rate during part-time is based on your age. Pension accrual for unsalaried periods Pension accrues for certain benefits paid during unsalaried periods, for studies leading to a degree or qualification and for periods of home care of your own child(ren) under the age of three. The prerequisite for accruing is that you have been gainfully employed at some point before you retire. Your total earnings during your working life must amount to at least EUR 17, The Supplement at the end of this booklet includes a table of benefits paid during unsalaried periods for which accrues. The basis for the accrual, or what is used as the basis when calculating your, is determined differently depending on the benefit. The annual accrual rate is always 1.5 per cent. Life expectancy coefficient The life expectancy coefficient is used to adjust your amount according to changes in life

7 Pension Provision for Employees and the Self-employed expectancy. The coefficient is used to keep in check expenditures that rise as people live longer. The life expectancy coefficient is determined separately for each age cohort at the age of 62. It is determined based on the mortality statistics of the preceding five years. If the average length of life increases, the life expectancy coefficient will reduce your accrued monthly. You can compensate this reduction by working longer. Pensions based on age Retire flexibly on an old-age You can choose to retire on an old-age as of age 63. You can carry on working and accruing until the age of 68. When you want to retire, you have to agree with your employer about the termination of your employment. Before you can start withdrawing your old-age, your employment must be terminated. To receive your, you must fill in an application for oldage. Please submit your application approximately two months before your intended time of retirement. You may be granted old-age in retrospect for three months before the month in which you apply for the or, for legitimate reasons, also for a longer period. However, if you are self-employed or a farmer, you do not have to close down your business in order to receive old-age. If you decide to continue your self-employment alongside your old-age, you can take out voluntary YEL/MYEL insurance, in which case you will accrue new alongside your old-age until you reach the age of 68 years. If you work in the public sector, you may have an occupational or individual retirement age. In general, the occupational retirement age is less than 63 years, while the individual retirement age is between the ages of 63 and 65. However, you may retire on an old-age before your individual retirement age, in which case your will be reduced. The reduction does not apply if you were born in 1960 or later. The retirement age for public-sector contracts of employment that have ended is 65 years. If you retire before the age of 65, your accrued before 1995 will be reduced. For more information on publicsector s, please contact Keva. Early old-age If you are working in the private sector, you are no longer entitled to

8 8 Pension Provision for Employees and the Self-employed 2015 an early old-age. This rule does not apply, however, if you are an employee insured under MEL. In that case, you may be entitled to an old-age before reaching the lowered retirement age. For more information, please contact the Seafarer s Pensions Fund. If you work in the public sector and were born before 1960, you may be entitled to an early old-age. For more information, please contact Keva. Old-age for the long-term unemployed aged 62 If you were born in 1957 or earlier and have received an unemployment daily allowance for 500 days and for additional days, you can apply for an old-age once you have turned 62 years. Please attach a certificate of your unemployment allowance for additional days, issued by the paying institution. No reduction for early retirement will be made to the that you have accrued up to the time of retirement. However, if you work in the public sector, the that you have accrued before 1995 will be reduced. For more information on the reduction of your, please contact Keva. If you are self-employed, you are not entitled to additional days of the unemployment allowance, which means that you cannot receive a based on unemployment. For further information on unemployment security, please contact your unemployment fund, the Federation of Unemployment Funds in Finland (TYJ) or Kela. Deferred old-age You can defer your retirement on an old-age beyond the age of 68. Your will be increased by 0.4 per cent for each month for which your retirement is postponed. You do not have to end your employment in order to receive a deferred old-age. Converting other into old-age If you are on a disability, your will automatically be converted into an old-age at the age of 63, providing that your disability has begun in 2006 or later. If your disability began in 2005 or earlier, your will be converted into an old-age at the age of 65. If you have engaged in gainful employment or self-employment alongside your disability in 2005 or later, you will have accrued new for this work. The new component is not paid out automatically; you have to apply for it separately. You can submit your application at the earliest when your

9 Pension Provision for Employees and the Self-employed disability is converted into an old-age, providing that your employment has terminated. If you are drawing a part-time, you may choose to retire on an old-age between the ages of 63 and 68. Your old-age will be paid based on application when your part-time employment has ended. However, if you are selfemployed or a farmer, you do not have to close down your business in order to receive old-age. Amount of old-age The you have accrued during your working life will be paid out to you as old-age. When calculating the accrued old-age, both your earnings and income in the form of benefits during unsalaried periods will be taken into consideration to the end of the month before the month in which you will retire. The earnings-related unemployment allowance forms an exception since will accrue only to the end of the month during which you turn 63, even if you were paid the daily allowance beyond that age. Your accrued at the time of your retirement will be adjusted with the confirmed life expectancy coefficient of the year in which you turned 62. The Ministry of Social Affairs and Health has confirmed the life expectancy coefficient for 2015 to be This coefficient will be applied to your starting oldage if you were born in Easing the load by retiring part-time The purpose of the part-time is to lighten your workload before retiring on an old-age. When you draw a part-time, you work part-time. Therefore you have to negotiate a possible move to parttime with your employer. Your employer is not under obligation to arrange part-time work for you, but you can also begin working parttime for another employer or as a selfemployed person. If you are self-employed or a farmer and you consider part-time retirement, you have to halve your work input or, in practice, halve your YEL/MYEL income. You have to present a statement to your own provider of how you will carry this out in practice. If you are a seafarer, your part-time includes special features. For more information, please contact the Seafarer s Pension Fund. There are some differences between public and private sector part-time s. For more information, please contact Keva. The national is not granted as a part-time.

10 10 Pension Provision for Employees and the Self-employed 2015 Right to Part-time Pension You can retire on a part-time if you have turned 61 years have worked full-time for 12 months during the last 18 months (the review period may be extended by a maximum of six months if, during this time, you have received sickness allowance, sick pay, income compensation or daily allowance under the Workers Compensation Insurance Act or the Motor Liability Insurance Act). have accrued earnings-related for at least 5 years during the past 15 years (including employment in Finland and other EU/EEA countries, Switzerland or countries with which Finland has concluded a social security agreement) are not receiving any other earnings-related in your own right or corresponding benefits from abroad. If you receive survivors and/or national, you can still be awarded a part-time. Nor does paid as a lump sum prevent you from qualifying for a parttime. However, if you are a farmer and you receive a farmers early retirement aid, you are not entitled to part-time. From full-time work to part-time retirement Full-time work for an employee is fulltime work as defined in the collective agreement of the field. You can also retire part-time from several concurrent part-time jobs, providing your combined working hours amount to at least 35 hours per week. If you are self-employed, your fulltime working hours are calculated on the basis of the YEL/MYEL earnings from work for which you pay your insurance contributions. Your annual YEL earnings before retiring part-time must amount to at least EUR 15, and your annual MYEL earnings to at least EUR 7, You do not qualify for part-time if you work only occasionally or not at all. Requirement for part-time work When you transfer to part-time work, your earnings must decrease to per cent of your stabilised earnings from full-time work. The decrease in your earnings must correspond to the reduction in your working hours. Your individual earnings limit will be set once your begins. Your monthly earnings limit may vary occasionally by no more than 15 per cent. If the variation in your earnings from part-time work is more than 15 per cent in either direction, your will be recalculated. If you are self-employed, your halved YEL/MYEL earnings (3,751.07)

11 Pension Provision for Employees and the Self-employed should amount to at least the lower limit (YEL earnings EUR 7, and MYEL earnings EUR 3, per year). You may also terminate your selfemployment altogether and take up other part-time work. You can work part-time in Finland or in another EU Member State. You may not take breaks that exceed 6 weeks in your part-time work. Annual leave or sick leave do not constitute such breaks, whereas, for example, lay-offs do. Amount of part-time The amount of your part-time is 50 per cent of the difference between your full-time and part-time earnings. Your stabilised earnings calculated for a longer period of time are used as your wage for full-time employment. In general, your stabilised earnings are determined on the basis of your earnings during five calendar years before your part-time retirement. If you are self-employed or a farmer, your part-time is 50 per cent of the difference between your fulltime and part-time earnings from self-employment. Your stabilised earnings are calculated based on your earnings from the last five calendar years preceding your part-time retirement. Your part-time may amount to a maximum of 75 per cent of the that you have accrued up to the start of the part-time. You may have trouble reaching this limit if, for example, your working life has been short. The life expectancy coefficient will not affect the amount of your parttime. You can request an estimate of your part-time from your provider. Part-time in the event of a lay-off If you are laid off while receiving parttime, you must notify your provider as soon as you have been informed of the lay-off. Please also inform your provider of any changes to your lay-off. As such, your part-time will not be discontinued if your lay-off lasts for a maximum of six weeks. If, contrary to your original notification, your lay-off were to continue for more than six weeks, your part-time will be discontinued six weeks after your layoff begun. Your lay-off can be partial or recurring, in which case your eligibility for receiving part-time will be reviewed based on your overall situation. Your provider will evaluate your eligibility for the based on your lay-off notification or information requested from your employer. Your part-time will be discontinued if you do not meet the requirements.

12 12 Pension Provision for Employees and the Self-employed 2015 Reapproval of part-time If your part-time has been discontinued because you have exceeded your earnings limit or due to a lay-off or for some other reason, you may begin receiving it again once you meet the conditions for receiving a part-time. If your part-time has been discontinued for six months at the most and you are once again eligible for a part-time, your former part-time will continue unchanged. The basis for the is still your stabilised earnings, calculated the previous time you were granted a parttime. You do not have to submit a new application for a part-time, but you must request your provider to reapprove your part-time (within six months from the date on which your part-time was discontinued). If your is discontinued for more than six months, your former cannot be reapproved. In such cases, you may retire on a part-time only when you again meet all the requirements for receiving that. In practice, you will have to be in full-time employment for at least 12 months. The amount of your part-time will then be recalculated and you must submit a new application to receive your new parttime. Becoming disabled or unemployed If you fall ill while receiving a parttime, Kela will pay you an allowance for the duration of your sick leave. The allowance will be determined on the basis of your earnings from part-time work. Your sick leave will not interrupt the payment of your part-time. If your disability continues for at least one year, you may be granted a disability or a temporary cash rehabilitation benefit after the allowance period. In that case, your part-time will be discontinued. Your part-time will also be discontinued if you become unemployed. In that case, you must register as an unemployed jobseeker at an Employment and Economic Development Office. You may be eligible for the unemployment allowance, providing you meet the conditions. In general, if you belong to an unemployment fund, your earnings-related unemployment allowance will be defined based on your earnings from full-time work. If you are not a member of a fund, you may be eligible for a basic allowance paid by Kela. Security when your work ability weakens If your working capacity has diminished, you can receive rehabilitation to help you cope at work. The aim of

13 Pension Provision for Employees and the Self-employed the rehabilitation is also to support your return to working life after, for example, a long sick leave. The rehabilitation can be vocational, social or medical. The purpose of vocational rehabilitation arranged and paid for by providers is to improve preconditions for work. Earnings-related providers also support preventive actions that aim to improve wellbeing at work. Vocational rehabilitation If you are an employee or a self-employed person under the age of 63, you are eligible for vocational rehabilitation if disability is imminent within the next five years. You, your supervisor or the occupational healthcare at your workplace can take the initiative to rehabilitation. Vocational rehabilitation is used to improve your preconditions for working when you are no longer able to continue in your former work due to your state of health. The aim of vocational rehabilitation is to postpone or prevent the expected disability, as well as to help you remain at work longer, despite your disability. You are entitled to rehabilitation arranged by providers if you have an established working life. To be eligible for rehabilitation, your earnings from work in the last five years must amount to EUR 34, Vocational rehabilitation is individual and carried out according to a rehabilitation plan based on your existing needs. Your age, profession, working history and education are taken into account when making up the plan. In general, the first step is to find out whether new work arrangements can make it possible for you to continue in your former work or in other assignments at your place of work. Vocational rehabilitation may include, for instance, work try-outs, work counselling or training leading to an occupation or profession. If you would like to start your own business or work as an entrepreneur, you can receive financial aid in the form of livelihood support. You may also be granted discretionary rehabilitation assistance in the process of starting self-employment. Kela arranges vocational rehabilitation especially for those outside working life, the young and the disabled. Kela is also responsible for medical rehabilitation. For more information on vocational rehabilitation, please contact a rehabilitation consultant at your own provider. Income during rehabilitation Rehabilitation allowance During vocational rehabilitation, you will receive a rehabilitation allowance that corresponds in size to the disability, increased by 33 per cent.

14 14 Pension Provision for Employees and the Self-employed 2015 If you are working during your rehabilitation, your rehabilitation allowance may be turned into a partial rehabilitation allowance. It amounts to half of the full rehabilitation allowance. Rehabilitation allowance paid to the employer If your vocational rehabilitation is carried out in the form of a work trial and your employer pays you a salary for this period, the rehabilitation allowance will be paid to your employer to the extent that it corresponds to your salary. If your salary is smaller than the rehabilitation allowance, the difference will be paid to you. Rehabilitation assistance While your rehabilitation plan is being prepared and you wait for your rehabilitation to start, and if you have no other source of income, you may receive discretionary rehabilitation assistance. The rehabilitation assistance corresponds in size to the disability. Rehabilitation costs Costs arising from rehabilitation may be compensated separately. If you are a student, you may receive compensation, for example, for travel expenses, books and other study supplies. The recommendations for compensation for rehabilitation costs are available online (in Finnish) at Pensions based on disability If you fall ill and are unable to continue working despite rehabilitation, you may be entitled to a disability if you are between the ages of 18 and 62. Pensions granted due to disability include the cash rehabilitation benefit and the partial cash rehabilitation benefit, which are granted on a temporary basis, as well the disability or the partial disability, which are granted until further notice. The prerequisites for disability s are basically the same in all lines of work. However, if you are working in the public sector, there may be some special requirements. For more information, please contact Keva. Disability You may be eligible for a disability if your working capacity is reduced due to illness, handicap or injury by at least 60 per cent for one year. When handling your application, the earnings-related provider must establish your right to rehabilitation within the earnings-related system. If this right has been established, your earnings-related provider will issue a preliminary decision without a separate application. The preliminary decision is valid for nine months.

15 Pension Provision for Employees and the Self-employed In general, the disability is preceded by an approximately oneyear period of sickness allowance paid by Kela. The disability will continue until your retirement age, unless there are changes to your working capacity. If there is a chance that your working capacity will be restored, you will be granted a temporary in the form of a cash rehabilitation benefit. If you receive a cash rehabilitation benefit, a treatment and rehabilitation plan will be drawn up for you. Based on your education and your previous work experience, it will be established what type of work would be suitable for you, taking into consideration your remaining working capacity. Partial disability You may be granted a partial disability if your working capacity has been reduced but you can cope with part-time work or lighter tasks. You can retire on a part-time disability straight from employment. While still working, you may apply for a preliminary ruling on your right to a partial disability. After receiving a favourable preliminary decision, you have nine months to decide when to retire. To receive a partial disability, your income level has to be reduced by at least 40 per cent compared to your stabilised average earnings. The reduction in earnings is generally carried out by reducing your working hours or changing your work tasks. If you are self-employed and want to retire on a partial disability, you must reduce your full-time business activities and related earnings by at least 40 per cent. However, you may also receive a partial disability even if you do not have a part-time job. If you are unemployed, you can register as a job seeker at an Employment and Economic Development Office and receive a reduced unemployment allowance in addition to your. The amount of your partial disability will be deducted from your unemployment allowance. A partial disability granted for a temporary period of time is called a partial cash rehabilitation benefit. Assessment of disability The assessment of disability is based on a medical certificate (Certificate B) of your state of health. Both medical and socio-economic assessments are carried out as part of the decisionmaking process. The socio-economic assessment is an evaluation of your remaining working and earnings capacity. Your age, education and previous work experience are also taken into consideration. A disability can be

16 16 Pension Provision for Employees and the Self-employed 2015 granted on more lenient conditions if you have turned 60. Your own provider offers individual advice concerning your disability, while the Finnish Centre for Pensions and Kela offer general advice on issues. Amount of disability Your disability consists of the that you have accrued during your employment history and self-employment activities. In addition, a component for projected able service will be added to your disability. The projected able service is the time from the beginning of the year in which your disability began until you turn 63 years. Your will be increased with the wage coefficient to the level of the starting year of your disability and adjusted with the life expectancy coefficient confirmed for that year. The temporary rehabilitation benefit and the disability are of equal size. However, for the active rehabilitation period, your will be increased by 33 per cent when you receive a rehabilitation benefit, providing that your return to work is supported through vocational rehabilitation. Your partial disability amounts to half of your full disability. If you are aged 24 55, your disability will be increased by a lump sum when your has continued without interruption for five full calendar years. The younger you are at the onset of disability, the bigger the increase will be. Component for projected able service You are entitled to a component for projected able service if you have earned at least EUR 17, during the ten calendar years before the year that your disability began. If you have earned less, your will amount to the accrued up to the start of the disability, excluding the component for projected able service. The accrual rate is 1.5 per cent per year of your stabilised income prior to your retirement. In general, your stabilized income is determined on the basis of your earnings during the five calendar years preceding the onset of your disability. When calculating earnings for projected able service, the earnings from your work and the earnings that serve as the basis for your social security benefits are taken into consideration. Social security benefits include, among other things, sickness allowance, unemployment allowance, parenthood allowance and compensation for job alternation leave. The life expectancy coefficient does not affect the component for projected able service.

17 Pension Provision for Employees and the Self-employed Security in the event of unemployment If you become unemployed, you must register as an unemployed jobseeker at an Employment and Economic Development Office. As an unemployed jobseeker, you may be granted an unemployment allowance either in the form of a basic unemployment allowance or an earnings-related daily allowance, depending on whether you are a member of an unemployment fund or not. The basic unemployment allowance and the earnings-related daily allowance are paid for a combined total of 500 days at most. After that, you are eligible for additional days if you have had -entitling work for at least 5 years during the last 20 years. Receiving additional days requires that you were born between 1950 and 1954 and have turned 59 years before the maximum period of 500 days of unemployment ends. If you were born between 1955 and 1956, the eligibility age for addition days of unemployment allowance is 60 years, while it is 61 years if you were born in 1957 or later. You may receive an additional daily allowance only until the end of the month in which you turn 65. If you are self-employed, you are not entitled to the additional daily allowance. In issues relating to unemployment, please turn primarily to your own unemployment fund, the Federation of Unemployment Funds or Kela for advice. Right to old-age at age 62 for the unemployed If you were born in 1957 or earlier and are receiving an unemployment allowance for additional days, you can apply for your old-age to start already at age 62. For more information, see section Pensions based on age above. Survivors security for surviving spouse and children Survivors paid to the surviving spouse and the children secures the family s income after the death of the spouse or parent. The survivors comprises the surviving spouse s and the orphan s. Children under the age of 18, the surviving spouse and, under certain conditions, the former spouse, are eligible for a survivors. Parties to a registered partnership are eligible for a surviving spouse s under the same conditions as are married spouses. Surviving spouse s right to survivors Surviving spouse s is payable to the surviving spouse if the spouses have, or have had, a child together. A further requirement is that the spouses were married at the time of the death of the spouse through whom the benefit is derived. A childless surviving spouse is eligible for surviving

18 18 Pension Provision for Employees and the Self-employed 2015 spouse s if all of the following requirements are met: the spouses were married before the surviving spouse reached the age of 50 and the deceased reached the age of 65 the marriage had continued for at least five years before the death of the spouse through whom the benefit is derived the surviving spouse is at least 50 years of age at the time of the death of the spouse through whom the benefit is derived or has received a disability for at least three years. A childless surviving spouse born before 1 July 1950 may be eligible for surviving spouse s under more lenient conditions if the spouses were married before 1 July The former spouse of the deceased is also entitled to a surviving spouse s if the deceased was liable to pay alimony to the former spouse. The alimony obligation must be based on a court decision or a decision issued by social services. Partners in a domestic partnership are not eligible for the surviving spouse s under the earningsrelated acts. Children s right to survivors The deceased person s biological and adopted child who is under the age of 18 is eligible for a survivors. The orphan s is also payable to the surviving spouse s child who, at the time of death, shared the same household with the deceased and the surviving spouse. The same rule applies to a child whose parent lives in a registered partnership. A foster child does not qualify for survivors under the earnings-related acts. Determining the survivors The survivors is determined on the basis of the that the deceased had accrued during his or her time in employment or self-employment. If the deceased was not yet retired, the survivor s is determined according to the disability that he or she would have received at the time of death. The life expectancy coefficient is not applied separately to the survivors, since the survivors is calculated based on the deceased person s or calculated to which the life expectancy coefficient has already been applied. Amount of surviving spouse s At most, the surviving spouse may receive half of the of the deceased. The number of children under the age of 18 and the amount of the surviving spouse s own s or earnings affect the amount of the surviving spouse s. The surviving spouse s is either the received by the surviving spouse or a so-called calculated pen-

19 Pension Provision for Employees and the Self-employed sion, which is determined in the same manner as the disability. However, the surviving spouse s own earnings will not affect the surviving spouse s until the youngest child reaches the age of 18. Any surviving spouse s paid to a former spouse will affect the amount of the surviving spouse s. The surviving spouse s is paid to the surviving spouse in addition to his or her own s or income from work. The amount of the surviving spouse s is listed in the Supplement at the end of this booklet. Amount of orphan s The amount of the orphan s depends on the number of beneficiaries. If there are several children, each child will receive his or her own equal proportion of the survivors. Payment of survivors The survivors is payable from the beginning of the month following the death of the insured. If the application for survivors is delayed, the is paid retroactively for six months or, for valid reasons, for a longer period of time. The surviving spouse s may be paid to the surviving spouse until his or her death. However, if a surviving spouse under 50 years of age remarries, the surviving spouse s will be discontinued. In that case, he or she will be paid a lump sum corresponding to the amount of the surviving spouse s for three years. Entering into a new marriage after the age of 50 does not affect the payment of the surviving spouse s. The orphan s will end when the child reaches the age of 18, or if he or she is given up for adoption. Other security for the family The surviving family s security can also be improved with supplementary insurance taken out by the employer, with private or life insurance. Kela may pay a surviving spouse s to a surviving spouse under the age of 65 and an orphan s to children under the age of 18. A child aged who is studying may also receive an orphan s. For further information, please contact Kela. The family may also be entitled to survivors based on the employment or residence of the deceased in EU/EEA countries, Switzerland or other countries with which Finland has signed a social security agreement. Family members of an employee under the age of 65 may receive compensation from a group life insurance. For more information, please contact the Employees Group Life Insurance Pool (Retro Life Assurance Company Ltd.). Family members of a selfemployed person lack this right.

20 20 Pension Provision for Employees and the Self-employed 2015 Survivors s are also paid from the obligatory workers compensation insurance and motor liability insurance (LITA). Also common-law spouses may be entitled to such s. These s are primary in relation to survivors s based on earnings-related acts and thus deducted from the survivors under the Employees Pensions Act (TyEL). Often, the LITA compensations are higher than the earnings-related, in which case no earnings-related is paid out. Apply for your You have to apply for all s by filling in a application. One application is enough when you apply for an earnings-related and a national. You can apply for your by filling in a paper or a printable online form. Application forms and instructions are available at On the same website, you can also submit an e-application for old-age by logging into the service. Some providers also have their own online application service. You can hand in your application to any private- or public-sector provider, the Finnish Centre for Pensions, an agent of Mela, or a Kela office. All of the above provide application forms as well as instructions and advice concerning the application procedure. You should apply for an old-age approximately two months before retiring. On the application, mark the date on which you wish your to begin. Before you apply for a part-time, please contact your provider to find out if you are eligible for part-time and what your part-time would amount to. Remember to negotiate with your employer what your part-time working hours and earnings would be, as well as the timeframe for your transfer to part-time retirement. Your applications for the disability and the cash rehabilitation benefit are linked to your sickness allowance. If you do not receive or apply for sickness allowance based on your health insurance, you may apply directly for a or a cash rehabilitation benefit. Please attach medical statement B, detailing your health status, to your disability application. To apply for vocational rehabilitation, please fill in the application for rehabilitation within the earnings-related scheme and attach medical statement B to your application. To apply for a survivors, please fill in the survivors application form. If you apply for a survivors for a child, you must fill in an orphan s application form for each child separately. If you apply for from abroad, you must supplement your

21 Pension Provision for Employees and the Self-employed application with Appendix U, in which you list the information concerning your work or residence abroad. If you reside abroad permanently, you must submit your application in your country of residence to the liaison body that handles matters. It will forward your application to Finland. Pension decision You will receive a decision from the provider in which you were last insured. In general, you will receive only one decision even if you have worked in both the private and the public sector. If you have also applied for a national, you will receive a separate decision from Kela. If you are displeased with your decision, you can appeal it. Appeal instructions come with the decision. Payment of Pension The earnings-related is paid once a month to the account number that you have stated in your application. The date of payment varies between providers. Earnings-related s are also paid abroad, regardless of your nationality. Lump-sum payment and increment for delays If your is less than EUR per month, it is paid as a lump sum. If your monthly is between EUR and 68.15, it may be paid as a lump-sum with your consent. If you are a surviving spouse under the age of 50 and you remarry, you will be paid a lump sum equalling the amount of the surviving spouse s for three years. An increment will be paid on your if its payment has been delayed for reasons due to the provider. The increment is calculated for every day of delay. The delay time begins three months after the end of the calendar month during which your application or another statement needed for processing has been received. However, the delay time can begin no sooner than from the beginning of the month following the start of your. Changes in and interruptions to payments You or your provider can take the initiative to make changes to your payments. If your work or working capacity change once your has been granted, the payment of your disability may be interrupted for a set time or discontinued altogether. Your disability may be left dormant for a minimum of three months and a maximum of two years at a time. If you receive a part-time and are laid off for more than six weeks, your part-time will be discontinued six weeks after the start of the lay-off period. As such, lay-offs

22 22 Pension Provision for Employees and the Self-employed 2015 shorter than six weeks will not result in your part-time being discontinued. Your part-time may be discontinued, however, if your annual earnings drop below the minimum level. The orphan s paid to a child will end when the child turns 18. The surviving spouse s will end if the surviving spouse remarries while under the age of 50. Pension from abroad and Appendix U If you have worked in EU and EEA countries or Switzerland, you may be entitled to a also from these countries. The following countries that have concluded a bilateral agreement on social security with Finland pay s to Finland: Australia, Canada, Chile, India, Israel, Quebec and the USA. Finland and China have signed a bilateral social security agreement, which is estimated to come into force in All agreements include rules on s, but benefits are determined in accordance with the national legislation of each country. Countries that lack an agreement may not pay s accrued from employment to Finland. The national legislation may contain restrictions concerning the entitlement criteria or the payment of s to another country. To apply for s from EU/EEA countries or Switzerland and social security agreement countries, use the same application form as for your from Finland. In addition to the application form, please fill in Appendix U. It contains questions on your residence and work abroad. If you reside in Finland, the Finnish Centre for Pensions will forward your application to these countries. You should start the application process for accrued abroad well ahead in time. Please complete Appendix U carefully, as the information you provide will form the basis for establishing your eligibility abroad. If possible, attach copies of documents relating to your work abroad, for example copies of work certificates, as well as foreign insurance numbers (equal to a social security number). For information regarding application and for contact information for different countries, please contact the Finnish Centre for Pensions. Foreign s tel Pensions are taxable income Your earnings-related, the national and the guarantee are taxable income. The taxation of income differs from that of

23 Pension Provision for Employees and the Self-employed income from work due to the income deduction. The income deduction applies to both state and municipal tax. The amount of the deduction depends on your combined taxable income. The tax authorities take into account the income deduction in your individual withholding rate. If you draw only a national, you will not pay tax at all due to the income deduction. In order for your advance tax to be correctly balanced with your final taxation from the start, please request a new withholding rate from your tax office as soon as you receive your decision. The tax office needs information on all your income during the current year in order to calculate your tax rate. You must deliver your taxation information to your own provider only in the year in which your starts. In the future, your provider will receive the information directly from the tax authorities. Working while drawing a While on an old-age, you may begin a new employment or start a business. Working does not affect the payment of your. If you work as a self-employed while drawing a, you can take out voluntary YEL/MYEL insurance. For work while drawing a, you will accrue a new at a rate of 1.5 per cent per year until the age of 68. Your new is payable from the age of 68 onwards. Working while drawing a disability may affect the payment of your. Based on your earnings, your may be interrupted or discontinued altogether, or a full may be changed into a partial disability. A temporary Act has been introduced to promote a return to work from disability. The Act will be in force until 31 December Under the Act, a person receiving a disability may earn at least EUR per month. Check with your provider whether your individual earnings limit is higher. If the payment of your has been suspended or left dormant because of work, you are obligated to notify your provider when your work stops so that the payment of your may start again. Your may be left dormant for a minimum of three months and a maximum of two years at a time. National alongside small earnings-related If your earnings-related is small, you may also receive a national. The general retirement age

24 24 Pension Provision for Employees and the Self-employed 2015 for the residence-based national is 65 years. You may retire on a national at age 63 at the earliest, in which case your will be permanently reduced. The amount of your national depends on the statutory earnings-related that you have accrued up to the age of 63. Your marital status also affects the amount of your national. The national is not paid out if your other income exceeds the maximum limits listed in the Supplement at the end of this booklet. The National Pensions Act includes certain types of aids that may be paid to recipients of the earnings-related and the national. National benefits are adjusted annually with the national index in line with increases in the cost of living. For more information, please contact Kela. Guarantee Kela will pay a guarantee if you are a er residing in Finland and your total, before tax, is below the monthly amount of the guarantee (EUR ). However, you will not receive the guarantee if you receive only a part-time, a partial disability or a survivors. You can apply for the guarantee from Kela. Kela s child increase Kela will pay a child increase if you receive an earnings-related and are caring for a child under the age of 16. The increase is EUR per month for each child. You may qualify for the child increase if you draw a full disability, an old-age or an early old-age. The amount of your earnings-related will not affect the child increase, which will be paid even if you receive only an earnings-related. Apply for the child increase from Kela with the form Eläkkeensaajan lapsikorotus (EV264/ EV264r in Finnish and Swedish). Pension reform 2017 The earnings-related s will be reformed as of the beginning of The Ministry of Social Affairs and Health is preparing the amendments to the earnings-related acts. Parliament is due to debate the bill in the autumn of As a result of the reform, the earliest eligibility age for old-age will rise gradually. The new eligibility limits will apply to persons born in 1955 or later. As of 2017, the earliest eligibility age for old-age will be raised by 3 months per birth-year cohort until it is 65 years for those born in A strenuous and extensive working life may offer the possibility to

25 Pension Provision for Employees and the Self-employed retire already at age 63. Alongside the disability there will be a years-of-service, which can be applied for after a working life spanning 38 years. One of the preconditions for receiving this is that the work is either physically or mentally wearing. The current part-time will be abolished and replaced by a partial early old-age. An individual will be able to draw either 25 or 50 per cent of the accrued oldage already at age 61. If the old-age is drawn before the individual s own earliest eligibility age, the will be reduced by 0.4 per cent per month left until the earliest eligibility age is reached. In 2025, the eligibility age for the partial early oldage will rise to 62 years. The life expectancy coefficient will be retained, but it will be calculated in a more lenient manner than currently as of 2027, at which time the retirement age for all age cohorts will be 65 years. The accrual rates are proposed to be changed so that people of all ages will accrue a at an annual rate of 1.5 per cent. Pension accrual will start from the age of 17. If the old-age is drawn after reaching the earliest eligibility age, the earned will be increased with an increment for deferred retirement of 0.4 per cent per deferred month. There will be a transition period for the changes in accrual rates, spanning until the year During the transition period, people aged between 53 and 62 years will accrue a at a rate of 1.7 per cent per year. During the transition period, those aged between 53 and 62 years will pay an employee s earnings-related contribution that has been increased by 1.5 percentage points. More information in English on the forthcoming reform is available at _reform_in_2017/1504/. Check your record Your record includes data on your employment history, social benefits for which accrues and your accrued earnings-related. In general, the record also includes an assessment of the old-age for those born before For those born in 1955 or later, the record will not include an assessment of the old-age since the earningsrelated legislation is undergoing a reform that will come into force in Please check your record carefully and notify the provider that has sent the earningsrelated record or the Finnish Centre for Pensions of any errors or omissions in the data.