Finland - Income Security Programs Classified As Social Insurance

Income security programs classified as social insurance

Finland's first national old-age pension plan dates from 1937, but it was so poorly funded that a new National Pensions Act was put into effect in 1957. In the late 1980s, this law, somewhat reformed, was still the basis of Finland's National Pension Plan, which was open to all residents over the age of sixteen, even to those who had never paid into it. Even those foreigners not from the Nordic countries were entitled to this pension if they had resided in Finland for at least five years. Those who left for residence in a country outside Nordic Europe, even those who were Finnish citizens, could receive the pension for only one year. The flat-rate national pension could be paid as an old-age pension, once a person reached the age of sixtyfive ; as an invalidity pension (either full or partial) to those between the ages of sixteen and sixty-four who were no longer able to work; or, in some cases, to the long-term unemployed who were in their late fifties or early sixties. In addition to these classes of beneficiaries, survivors of those eligible for national pensions who were not themselves eligible for the pensions could receive pensions under the terms of the Survivor's Pension Plan. Also tied to the National Pension Plan were payments for handicapped children living at home and for some combat veterans of World War II.

Payments of the national pension were uniform for everyone; in the mid-1980s, they amounted to Fmk334 a month. To this amount were added the assistance payment, which varied according to a pensioner's marital status, the cost of living in his or her locality, and other pensions that he or she received. Other supplementary payments could be made for dependent children, for degree of disability, and for housing costs, as well as for veterans of the Civil War and of World War II. In the mid-1980s, the supplemental payment to a single pensioner could range from Fmk1,362 to Fmk1,436 a month. The supplement for each child amounted to Fmk181, and housing supplements varied according to housing costs but could amount to as much as approximately Fmk1,000. Helplessness supplements could be worth up to about Fmk400, depending on the age and the physical state of the pensioner. National pensions were indexed, and they increased in value each year. Since reforms of the early 1980s, national pensions were not taxable if they were the sole source of income. Pensions were no longer affected by a spouse's earnings or pension income, and the national pension could only be reduced by income from other pensions. The National Pension Plan was funded by the beneficiary's own contributions, about 2 percent of his or her locally taxable income, and by employer contributions of 4 to 5 percent of the insured person's wages.

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