The pension system in Finland: Adequacy, sustainability and system design
Finland has a pension system that, in a unique way, combines a compulsory legislative basis, similar benefits for all, partial funding and private organization of the pension provision.
It is a hybrid, fulfilling the functions of first and second pillar pensions within the same scheme. The main pension scheme is a legislated and compulsory earnings-related scheme, which is supplemented by the residence-based, flat-rate pension scheme. This report evaluates the design of the pension system in Finland Finland; a parallel report discusses institutional structure and governance. After introductory discussion (section 1), section 2 summarises the analytical approach. Subsequent sections assess the system: objectives (section 3), the argument for a non-contributory pension (section 4), adequacy (section 5), the role of choice for workers (section 6), labour markets (section 7), risk sharing (section 8) and sustainability (section 9). Section 10 briefly discusses disability pensions, and section 11 voluntary pensions. Section 12 considers the way pensions policy is formulated and offers some broad conclusions.