Self-employed Finns 'lack trust' in pension system - ETK

Many self-employed Finns feel that they "cannot afford" to pay higher pension contributions and "lack trust" in the pension system, according to the Finnish Centre for Pensions (ETK).

A study from two of the centre’s economists, Satu Nivalainen and Sanna Tenhunen, examined the self-employed persons’ perceptions of paying adequate pension contributions and, under- and over-insurance among the self-employed.

This latter factor was measured by looking at the ratio of their confirmed income under the Self-employed Persons’ Pensions Act (YEL income) and their actual income from self-employment.

A quarter (25 per cent) of the self-employed were found to have YEL income of less than €12,600, running the risk of not having the right to earnings-related social benefits.

Furthermore, around half of those surveyed had a YEL income of less than 80 per cent of their actual current income.

While more than half of the respondents felt they had insured themselves adequately, 40 per cent thought that they did not contribute enough to their pensions.

Self-employed individuals without employees or co-partners were more likely to think they were not paying enough in contributions and had under-insured themselves based off their current income.

The same was true of those who felt that their workload had been too high in the last year or those that were concerned that their business had generated too little income over the same period.

Under-insurance based on actual income was also found to be more common among the young, and those with a basic education.

ETK said: “A common reason for underinsurance was that the self-employed felt they couldn’t afford to pay high enough pension contributions. Another reason was the self-employed did not think they were going to get an adequate pension anyway.

“Poor health or other reasons may make working in retirement impossible."

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