Employee Pension Plans
The Employees' Pensions Act was passed in 1961 to supplement the National Pension Plan which, while adequate for Finns living in the countryside--a majority of the population until the 1960s- -did not provide enough benefits for city dwellers. During the next decade, other compulsory wage-related pension plans were enacted into law for temporary employees, for national and local government employees, for those working for a state church, and for the self-employed. At the end of the decade, a supplementary plan was created for farmers as well. Seamen had had an incomebased plan since 1956, and, as of 1986, those active in freelance professions such as acting and writing also obtained coverage. These employment pension plans were completely funded by the employers, private or public, who paid contributions, equal on the average to about 10 percent of a worker's earnings, into funds managed by seven large insurance companies or who set up funds on their own. Self-employed persons had to choose a fund. The Central Pension Security Institute was responsible for keeping records about employment and benefits.
The normal age of pensionable retirement was sixty-five, and the pension paid was based on the average earnings one had received in the last four years of work ending two years before retirement. One could receive up to 60 percent of private-sector earnings and up to 66 percent of public-sector earnings. The average wage-related pension in the mid-1980s was about Fmk1,000 per month. Older employees, at work before these pension plans became effective, were guaranteed a minimum pension of at least 29 percent if they retired before 1975, and 37 percent if they retired after this date. Like the national pension, wage-related pensions were indexed, and they increased each year. In addition, there were provisions relating to disability, early or late retirement, and survivors' benefits similar to those in effect for the National Pension Plan.
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