Effective Retirement Age in 2014 Jari Kannisto Development Manager 5 Feb. 2015
Content Number of new retirees on an earnings-related pension Development of effective retirement age Employment Working life expectancy Finnish Centre for Pensions 2
Monitoring the aim to postpone the effective retirement age Expected effective retirement age corresponds, in principle, to life expectancy depicts the average effective retirement age if the retirement and mortality rates remain on the level of the review year independent of the demographic age structure Employment rate of the elderly Working life expectancy depicts the number of years in which a person at a certain age can be expected to be in an employment relationship or work as a self-employed person during his or her remaining life span based on a method that uses cross-sectional data on the probability of death rates, labour force participation rates and employment rates. Finnish Centre for Pensions 3
Effective retirement age in 2014 Effective retirement age 61.2 years (expected effective retirement age for a 25-year-old) 62.8 years (expected effective retirement age for a 50-year-old) Clearly rising effective retirement age the expected effective retirement age for a 25-year-old rose by 0.3 years compared to 2013 the expected effective retirement age for a 50-year-old rose by 0.2 years compared to 2013 Decreasing number of pension contingencies at age before the earliest eligibility age for old-age retirement Finnish Centre for Pensions 4
New retirees on an earnings-related pension 2004 2014, by pension type Persons 90 000 80 000 70 000 60 000 50 000 40 000 30 000 Part-time pension* Special pension for farmers Unemployment pension Disability pension Early old-age pension Old-age pension 20 000 10 000 0 2004 05 06 07 08 09 10 11 12 13 2014 In 2014, circa 70,300 persons retired on an earnings-related pension (excl. part-time pensions). * Persons retiring on a part-time pension are not included in the figure of new retirees. Finnish Centre for Pensions 5
New retirees on an old-age pension, by age Persons 25 000 20 000 15 000 2003 2009 2014 10 000 5 000 0-54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69- Age at onset of pension Finnish Centre for Pensions 6
Expected effective retirement age, all new retirees on an earnings-related pension Expected effective retirement age 64,0 63,5 63,0 62,5 62,0 61,5 61,0 For 50-year-olds 60,5 60,0 59,5 59,0 For 25-year-olds 58,5 58,0 57,5 57,0 1996 97 98 99 2000 01 02 03 04 05 06 07 08 09 10 11 12 13 2014 Finnish Centre for Pensions 7
% Proportion of new retirees on an earningsrelated pension of all insured, 25 49-year-olds 1,0 0,9 0,8 0,7 0,6 0,5 0,4 2012 2013 2014 0,3 0,2 0,1 0,0 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 Age at end of statistical year Finnish Centre for Pensions 8
% Proportion of new retirees on an earningsrelated pension of all insured, 50 69-year-olds 60 50 40 30 2012 2013 2014 20 10 0 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 Age at end of statistical year Finnish Centre for Pensions 9
Retirement on an earnings-related pension in 2014 (1/2) 70,300 persons retired on an earnings-related pension (3,000 less than in 2013) Number of new retirees on an old-age pension declined by 3% compared to 2013 more than 51,000 persons retired on an old-age pension more than 70% of all new retirees retired on an old-age pension Number of new retirees on a disability pension declined by 8% compared to 2013 18,000 people retired on a disability pension. For the first time in the 2000s, the number was less than 20,000 persons. Finnish Centre for Pensions 10
Retirement on an earnings-related pension in 2014 (2/2) Popularity of part-time pension declined clearly 3,400 persons retired on a part-time pension Age limit for persons born in 1953 is 60 years Age limit for persons born in 1954 or later is 61 years Decline in pension contingencies No differences between males and females Finnish Centre for Pensions 11
Expected effective retirement age: aim and realisation Expected effective retirement age 65,0 64,5 64,0 63,5 63,0 62,5 Aim agreed on in 2013 structural policy programme: 62.4 years by 2025* 62,0 61,5 61,0 60,5 For a 25-year-old 60,0 59,5 59,0 58,5 58,0 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 *Requires an annual increase of an ample 0.1 years from the 2012 level. Finnish Centre for Pensions 12
Future (1/2) For the main part, the direct effects of the legislative amendments of the 2005 pension reform are now evident in the effective retirement age the effective retirement age has risen and the selection of pensions has been reduced impossible to assess the impact of the life expectancy coefficient at this point Future development depends on changes in behaviour the retirement intentions have been extended many different factors affect the decision to retire Finnish Centre for Pensions 13
Future (2/2) Future development depends on economic outlook Future development depends on working life improvements In 2015, the number of new retirees will be slightly higher than in 2014 Finnish Centre for Pensions 14
Employment rates of the working-aged population (15 64 years), the young (25 34 years) and the elderly (55 64 years) in 2002 2014 % 90 80 70 60 50 40 30 20 15 64 yrs 25 34 yrs 55 64 yrs 10 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Labour Force Surveys 2002 2014, Statistics Finland Finnish Centre Eläketurvakeskus for Pensions 15 15
Employment rates for 55 59-year-olds and 60 64-year-olds in 2002 2014 % 80 70 55 59-year-olds 60 50 60 64-year-olds 40 30 20 10 0 02 03 04 05 06 07 08 09 10 11 12 13 14 02 03 04 05 06 07 08 09 10 11 12 13 14 Employment rates in 2014: 55 59-year-olds 74.1% and 60 64-year-olds 44.3% Employment rates in 2013: 55 59-year-olds 73.4% and 60 64-year-olds 44.0% Source: Labour Force Surveys 2002 2014, Statistics Finland Finnish Centre for Pensions 16
Employment rates for 55 67-year-olds in 2002, 2007, 2013 and 2014 % 90 80 2002 2007 2013 2014 70 60 50 40 30 20 10 0 55 56 57 58 59 60 61 62 63 64 65 66 67 Source: Labour Force Surveys 2002 2014, Statistics Finland Finnish Centre for Pensions 17
Employment rates for 55 59- and 60 64-year-olds in 2002 2014 % 11 10 55 59-year-olds 9 8 7 60 64-year-olds 6 5 4 3 2 1 0 02 04 06 08 10 12 14 02 04 06 08 10 12 14 Employment rates in 2014: 55 59-year-olds 7.2% and 60 64-year-olds 7.3% Employment rates in 2013: 55 59-year-olds 7.2% and 60 64-year-olds 6.5% Source: Labour Force Surveys 2002 2014, Statistics Finland Finnish Centre for Pensions 18
% 90 Average employment rates of 55 64-yearolds in Nordic and EU countries in 2003 2013 80 70 60 50 40 Iceland Sweden Norway Denmark Finland EU 17 EU 27 30 20 10 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: Eurostat, Employment, Labour Force Surveys Finnish Centre for Pensions 19
Age-cohort differences must be taken into account in relation to the employment development of the elderly (55 64-year-olds) (1/2) Overall employment rate has not improved since the post-financial-crisis level employment rate of working-aged population in 2014: 68.3% (decrease 0.2 percentage points since 2013) favourable employment development of the elderly in recent years employment rate of 55 59-year-olds record high in statistical history (73.4%) employment rate of 0 64-year-olds record high in statistical history (44.3%) employment rate of 25 34-year-olds decreased as of 2008 by 6.0 percentage points (75.1% in 2014) Finnish Centre for Pensions 20
Age-cohort differences must be taken into account in relation to the employment development of the elderly (55 64-year-olds) (2/2) Finland lags behind the other Nordic countries regarding the employment of the elderly Closest to Finland is Denmark, which is a few percentage points ahead of Finland the gap has not narrowed The EU27 countries lag behind Finland by 8.2 percentage points Finnish Centre for Pensions 21
Expected length of working life for a 15-year-old 2000 2014 Years 40 35 30 25 20 15 10 5 Expected labour force participation Working life expectancy 0 2000 2002 2004 2006 2008 2010 2012 2014 Finnish Centre for Pensions 22
Working life expectancy for a 15-year-old 2000 2014 Years 40 35 30 25 20 15 10 Males Females 5 0 2000 2002 2004 2006 2008 2010 2012 2014 Finnish Centre for Pensions 23
Length of working life The expected labour force participation in 2014 was 37.2 years an increase of 0,2 years from the previous year an increase of 2.1 years in the 2000s The working life expectancy in 2014 was 33.9 years as in 2013 33.9 years for males (decrease of 0.1 years compared to last year) 33.8 years for females (as in 2013) The working life expectancy has increased by 2.4 years in the 2000s males: an increase of 1.5 years females: an increase of 3.2 years Finnish Centre for Pensions 24