The pension is determined on the basis of employment with Kela, in accordance with the State Employees’ Pensions Act (VaEL).
Your pension is made up of two components: pension accrued until the end of 2004 and pension earned as of the start of 2005 until retirement.
Accrual of pension up to the end of 2004
The pension component accrued until the end of 2004 is calculated according to the ‘old rules’, on the basis of the employment period that entitles you to a pension and your pensionable earnings.
Pensionable earnings are calculated on the basis of the years prior to the end of employment. If, for example, your employment was valid on 31 December 2004, your pensionable earnings will be calculated on the basis of your earnings in the preceding ten years (average earnings from 1995–2004). If your employment is shorter, a shorter period of time will be used, down to a period of one month.
Pension accrues as of the age of 21 for a consecutive period of employment with Kela lasting at least one month. The period of employment prior to 1998 also requires a minimum amount of monthly earnings as a condition for receiving the pension.
If the employee was employed by Kela on 28 February 1993 and the employment continues uninterrupted until the pension contingency, a pension with additional cover will accrue as follows:
- 2.2% per year until 31 December 1994
- 1.5% per year as of 1 January 1995
- 2% per year beginning in the month following the month in which one turns 55.
If employment with Kela began on 1 March 1993 or thereafter or if it does not continue uninterrupted until the pension contingency, a pension with basic cover will accrue as follows:
- 2% per year until 31 December 1994
- 1.5% per year as of 1 January 1995
- 2.5% per year beginning in the year in which one turns 60.
Pension accrued from employment with Kela at the basic cover level until the end of 2004 will be integrated with other earnings-related pensions (including private-sector pensions). For further information, please see the section "Determining the total pension".
Pension accrual since 1 January 2005
As of 1 Jan 2005, the duration of employment is no longer significant, but rather pension accrues on employment earnings between the ages of 18 and 68. When calculating the pension, earnings are increased to the level of the starting year of retirement using a wage coefficient and the employee’s pension contribution is deducted from the earnings. There is no maximum amount of pension, so the longer you work, the better your pension will be.
Your pension accrues at a rate of
- 1.5% of your annual earnings between the ages of 18 and 52
- 1.9% of your annual earnings between the ages of 53 and 62
- 4.5% of your annual earnings between the ages of 63 and 67
For persons born in 1949 or before whose employment started before 1 March 1993 and continues until retirement age, pension will, however, accrue at a rate of 2.0% on annual earnings, instead of 1.9%, between the ages of 55 and 62.
Pension accrual ends after turning 68, but if you do not want to retire at 68 your pension will be supplemented with an increase for deferred retirement.
Pension accrues as of 1 January 2005 also for certain unpaid periods on the basis of the earnings or reported income on which the benefits are based (55–117% depending on the benefit). Regardless of your age, the accrual percentage is 1.5% per year.
New pension accrues as of 1 January 2005 for employment while collecting a pension up to the age of 68. Regardless of your age, the accrual percentage is 1.5% of your annual income.
Pension accrual for projected pensionable service
The projected pensionable service component is most commonly incorporated in disability pension.
The projected pensionable service increases the amount of pension you receive, because the pension is calculated as though you were going to continue in working life until the age of 63. The projected pensionable service period is the time from the start of the year during which the disability began to the age of 63.
Projected pension rights apply to your disability pension if you have, during the past 10 years, earned the minimum amount under the earnings-related pension acts, which at the 2010 level is EUR 15,470.09.
Your earnings for projected pensionable service are determined based on your earnings from the five years preceding the onset of disability.
The accrual percentages for projected pensionable service for work disability, unemployment and survivors’ pension are as follows:
- 1.5% on projected pensionable service until turning 50
- 1.3% on projected pensionable service between the ages of 50 and 63. As of 1 January 2010, the accrual percentage is 1.5%. The change concerns disability pensions in which the pension contingency has taken place on 1 January 2010 or thereafter.
