Prefunding in a Defined Benefit Pension System

Jukka Lassila and Tarmo Valkonen

in Social Security Pension Reform in Europe

Published by University of Chicago Press

Published in print January 2002 | ISBN: 9780226241081
Published online February 2013 | e-ISBN: 9780226241913 | DOI:
Prefunding in a Defined Benefit Pension System

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This chapter discusses the Finnish pension system. Finland's pension system consists of earnings-related pensions that cover almost all paid work, and a residence-based national pension. There has been considerable rivalry between these two parts, with the former now the undisputed winner. The Finnish earnings-related system has some rather unique features: It is statutory by law but largely privately run, and has collected funds to ease contribution increases due to aging in the future. Despite the challenges caused by aging, it seems likely that the system will be changed from within, rather than simply replaced with a new system. The chapter is organized as follows. Section 8.2 describes the main features of the Finnish pension systems, and Section 8.3 describes the current situation and future prospects. Section 8.4 discusses the reforms made during the last decade. Recent policy proposals are surveyed in Section 8. 5. Section 8.6 concludes with some views on future changes. A commentary and discussion summary are also included at the end of the chapter.

Keywords: Finland; pension system; earnings-related pensions; pension reforms

Chapter.  10515 words.  Illustrated.

Subjects: Public Economics

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