Only 13 per cent of Finns know how much they pay in pension contributions, according to the Finnish Centre for Pensions (ETK).

Its latest study also found that 29 per cent of savers underestimate their contribution rate. In addition, the highly educated, the self-employed and those belonging to the highest income bracket are more familiar than others with their pension contribution rate.

On the other hand, women, those with a basic educational level, pensioners and those belonging to the lower-income brackets were able to estimate their pension contribution rate less often than others.

On average, the pension contribution rate is 24.4 per cent of the monthly wage. The contribution rate applies to all Finns who are covered by the earnings-related pension acts, regardless of age.

The worker’s share is 7.15 per cent for workers under 53 years and over 63 years and 8.65 per cent for workers between the ages of 53 and 62. The average employer contribution in 2020 is 16.95 per cent. In the spring of 2020, due to the financial crisis caused by the corona pandemic, the employer’s contribution was reduced temporarily by 2.6 per cent.

“The lion’s share of pension financing consists of paid pension contributions. It is difficult to discuss pension financing if people don’t know how much they pay in pension contributions,” ETK economist, Sanna Tenhunen, stated.

Tenhunen believes that people’s scarcity of knowledge on their contribution can be explained by a lack of information on payslips. In Finland, the payslip shows only the worker’s share of the pension contribution, not the employer’s. The worker’s contribution is only part of their total pension contribution.

“The self-employed, on the other hand, handle the contribution payments themselves, which is why they have a clearer idea of how much they pay for their pensions. They also stand out as a group that is familiar with their contribution rate more often than others,” she added.

As part of the methodology of the study, ETK assessed estimates of the contribution rate to be correct if they were within a 5-percentage-point range of the correct level (19-29 per cent). The survey was conducted in September-December 2019. A total of 1,757 Finns aged between 25 and 67 years responded to the survey.

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