A third of Finns delay retirement for financial incentives

Around a third of newly retired Finnish people delayed their retirement for financial incentives, according to a study by the Finnish Centre for Pensions (ETK).

Meanwhile, just under a third felt that employer encouragement, improved leadership skills or valuing the experience of older workers would have persuaded them to continue working.

According to the survey, financial incentives were more effective amongst men, those who received a higher pension, and those who felt they have good health and wellbeing.

On the other hand, working conditions and employer attitudes were more important for women, those with lower pensions, and those who rated their pre-retirement health and wellbeing as poor.

Pre-retirement awareness of pensions was found to be “fairly high”, with almost all respondents having checked how much pension they would receive when they retired.

Nine in 10 survey respondents said they were aware of the increment for late retirement, which is paid when retirement is deferred past retirement age.

Seven in 10 stated they were familiar with the life expectancy coefficient, which reduces the amount of pension based on increases in average life expectancy.

“Almost one third of the respondents said that the pension that accrues from continuing to work or the increase for deferred retirement had encouraged them to retire later,” commented ETK economist, Satu Nivalainen.

“Slightly less than one fifth felt that the pension-reducing effect of the life expectancy coefficient had persuaded them to work longer.

“Changes in employer policies and working conditions would have encouraged continued working, particularly for those who felt that their pre-retirement working situation was not the best possible in these respects.

“Improved leadership practices would have encouraged people to continue working, particularly those who felt that their pre-retirement work situation was not well managed.”

ETK’s study also found that eight in 10 were satisfied with the time they had chosen to retire, while more than one in 10 would have liked to have retired later.

Respondents who were unaware of the impact of the life expectancy factor or the increase for deferred retirement were more likely to wish they had retired later.

“Awareness of how the timing of retirement affects the amount of the pension should be spread more widely among the age groups planning to retire,” Nivalainen said.

“In this way we could avoid situations where people retire with a full pension earlier than they would have liked due to a lack of information.”

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