The board of directors of Finnish public sector pension provider Keva is set to propose a reduction in the equalisation levy paid by public sector employers in 2026.

If approved, the total equalisation levy for 2026 would amount to €553m, representing a €24m decrease from 2025.

The proposed change would bring the overall contribution rate down by 0.15 percentage points to 26.6 per cent of the payroll of Keva’s member organisations.

The Ministry of Finance will confirm the final level of the levy in December, in accordance with the Keva Act.

Of the total levy, 48.7 per cent would be paid by municipalities and 51.3 per cent by regional welfare authorities. The amount payable by each municipality or welfare region is not linked to the wages paid, but instead distributed in proportion to their tax or state funding.

Keva said that, based on current data and assumptions, the financial position of its pension system remains stable, allowing for a further moderate reduction in contribution levels.

“The fund has recovered from the dip in early 2025. Payroll growth has slowed and the number of insured persons has levelled off, but lower inflation and wage pressures are supporting real payroll growth,” Keva said.

The organisation added that its financial position has strengthened steadily since the mid-2010s, enabling a series of gradual premium reductions since 2015.

Keva’s member organisations pay two components: a payroll-based pension contribution and the equalisation contribution shared between municipalities and welfare regions.

Within the overall structure, the average salary-based pension contribution mirrors the average TyEL (Employees Pensions Act) rate. According to the Finnish labour market confederations’ proposal, the TyEL contribution for 2026 will remain at 24.4 per cent of wages and salaries.

The payroll-based pension contribution comprises an earnings-related pension component and a disability pension component.

Keva’s board will propose that in 2026, the earnings-related pension contribution be set at 23.6 per cent of wages and salaries, while the average disability pension contribution will remain at 0.8 per cent, with a maximum rate of 4.4 per cent.

The payroll contribution also includes the employee’s pension share, which is withheld by the employer.

Under the 2017 pension reform, the higher employee contribution for those aged 53–62 will end in 2026, leaving a uniform 7.3 per cent employee rate. On average, employers will contribute 17.1 per cent of wages.

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