Chapter

Finland: From Statutory Pension Dominance towards Voluntary Private Schemes

Olli Kangas and Päivi Luna

in The Varieties of Pension Governance

Published in print March 2011 | ISBN: 9780199586028
Published online May 2011 | e-ISBN: 9780191725586 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780199586028.003.0008
Finland: From Statutory Pension Dominance towards Voluntary Private Schemes

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Finland's pension system consists of income-tested ‘national pensions’ and statutory employment-related pensions. The latter are ‘hybrid’ public–private pensions that were legislated in the 1960s and partly funded through private insurance companies, while employers and trade unions participate in their administration. There is a strong corporatist element: the social partners have been owners of the statutory schemes, therefore they channelled improvements through ‘their’ own schemes, not via voluntary private pensions as elsewhere. Since the mandatory employment-related pensions are income-related with no ceilings, the high-income earners have had no incentives to contract voluntary supplementary pensions. However, this is changing through piecemeal institutional change: as statutory pension promises are cut back, an expansion of voluntary occupational and individual pensions occurs.

Keywords: Finland; public–private mix; mandatory occupational pension; employers; trade unions; corporatism; voluntary pensions; pension fund governance

Chapter.  11673 words.  Illustrated.

Subjects: Political Economy

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