The effective retirement age in Finland has risen faster than policymakers anticipated, reaching 63.2 years in 2025, according to the Finnish Centre for Pensions (ETK)

The expected effective retirement age has surpassed the 62.4-year goal agreed in 2009, reiterated in 2013 and later incorporated into the 2017 pension reform.

The initial objective was to raise the average retirement age from 59.4 to at least 62.4 years by 2025.

However, the target was achieved early, with the 62.4-year milestone reached by 2021.

Last year’s figure of 63.2 years meant the average retirement age is now almost a year higher than originally planned.

The increase marked the conclusion of a significant phase in Finland’s pension and labour market policy, which has seen people retire later and spend longer in employment.

Indeed, ETK managing director, Mikko Kautto, said the improvement reflected a series of structural changes to pension regulation.

“At the start of the period, the abolition of the unemployment pension delayed retirement.

"Towards the end of the period, raising the retirement age for the old-age pension had a similar impact,” he explained.

In addition to regulatory reform, broader labour market developments have played a role.

Changes in the nature of work, rising educational attainment and improved work ability have contributed to a decline in disability retirement.

Kautto emphasised that longer working lives were critical for the sustainability of the welfare state, generating several billion euros through strengthened earnings-related pension funding and higher tax revenues for both the state and municipalities.

“As people retire later and spend more years in employment, they receive better pensions,” he added.

While the statutory retirement age is set to increase further if life expectancy continues to rise, Kautto noted that employment levels remained a decisive factor in determining actual retirement behaviour.

“The trend of later retirement may therefore well persist, even though no new targets have been set,” he said.

“Although governments have pledged to improve employment rates among both young people and middle-aged individuals, there has been little progress in this area.”

Finnish Centre for Pensions development manager, Jari Kannisto, also highlighted the link between reform and employment outcomes among older cohorts.

“Since the 2017 pension reform, the employment rate of people aged 60 and over has increased considerably.

"Raising the retirement age has had a significant impact on the number of older people in the workforce, which has increased by almost 100,000 over the past decade,” he noted.

Meanwhile, employment among older people continued to rise in 2025 despite an overall decline in employment across the wider population.

Kannisto argued that those aged 65 and over would become an increasingly important source of labour in an ageing society, adding that there remained significant untapped potential within this group.

In total, 60,200 people retired on an earnings-related pension in 2025. Of these, around 42,500 took an old-age pension, while the remainder retired on disability grounds.

The majority of new old-age pensioners retired at age 64, although one in four postponed retirement until age 65.

The structure of retirement has also shifted markedly over time.

During the financial crisis, just over a third of new retirees received an old-age pension.

That proportion has now risen to around two-thirds.

Meanwhile, the number of new disability pension recipients has fallen sharply.

In 2025, one-third fewer Finns retired on a disability pension than in 2008, reflecting a significant reduction in disability risk.

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