Finnish savers divided on best route to strengthen pension financing

Increasing employment-based immigration to improve the employment rate and strengthen pension financing is supported in full or to some degree by 52 per cent of Finns, according to research from the Finnish Centre for Pensions.

The group's latest Pensions Barometer found that nearly all demographics "strongly opposed" any pension cuts, with 79 per cent of respondents opposing measures to cut the pensions of future retirees, and 88 per cent opposing measures to cut current retirees' pensions.

However, whilst an "ample" 37 per cent of respondents viewed an increase in employment-based immigration as the best way to improve pension financing, opinion was polarised, with 30 per cent of savers opposing such measures.

In particular, higher educated, upper-level office workers, students, residents in the capital and supporters of the green party were most likely to take a positive stance towards employment-based immigration, whilst low-skilled workers and supporters of the Finns Party were more likely to oppose such measures.

Raising pension contributions of employees and employers was the second most backed solution to strengthen pension financing, with 39 per cent agreeing or strongly agreeing with measures to raise contributions, and 30 per cent highlighted this as the best way to improve pension financing.

However, 38 per cent of respondents disagreed or strongly disagreed with this measure, with the self-employed typically more critical about raising contribution rates, while supporters of the Left Alliance and the Finnish Social Democratic Party were more likely to support these measures.

Cuts to retirement age were also found to be less favourable across the majority of demographics, with just 29 per cent of savers willing to accept an increase in retirement age, and only 13 per cent viewing this as the best alternative to strengthen pension financing.

Despite the concerns, the Finnish Centre for Pensions emphasised that decreasing birth rates and an ageing population will increase pressure to reform pension financing in future.

Finnish Centre for Pensions economist, Sanna Tenhunen, commented: “If the volume of the working-age population increases as a result of, for example, an increase in employment-based immigration, the number of pension contribution payers grows and the pressure on pension financing decreases.

“Other alternatives to stabilise pension financing includes raising either the pension contributions or the retirement age.”

“We have no easy solutions," Tenhunen added, emphasising that nevertheless, the basis for strengthening pension finance was good.

“This may be explained partly by the fact that our system weathered the corona pandemic so well."

Indeed, the barometer found that Covid-19 has not affected how the majority of savers view the Finnish pension system, with four in five stating that the financial challenges arising from Covid-19 have not reduced their trust in the pension system.

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