Finnish life expectancy coefficient change reduces pensioner benefits
Written by Jack Gray
The Finnish Ministry of Social Affairs and Health has confirmed the life expectancy coefficient for those whose pension starts in 2020 or later will be 0.95404.
This will result in pensioners born in 1958 seeing their monthly benefits fall by nearly 4.6 per cent.
The life expectancy coefficient is in place to limit the increase in pension costs due to increasing life expectancy and to encourage people to continue working for longer.
As life expectancy increases, the life expectancy coefficient reduces the monthly pension payable, although it does not decrease the total amount of pension someone will receive over the full retirement age if the pensioner lives to an age corresponding to the increase in life expectancy.
The Finnish government explained: “The life expectancy coefficient was included in the 2005 pension reform and was applied for the first time to pensions starting in 2010.
“The life expectancy coefficient is fixed for each year of birth at the age of 62 and does not change after the start of retirement.”
The life expectancy reference level is based on the expectation for 2009, when the life expectancy coefficient was set to one.
Those born in 1948 saw the largest change in the life expectancy coefficient, when it fell by 0.083.
This year’s change was a 0.0318 reduction.