The purpose of pension index adjustments is to ensure that a person retiring gets a starting pension that is reasonable considering the income level while still working, and to ensure the future purchasing power of the pension in payment.

The pension provider uses the wage coefficient to adjust the insured’s wages and income from work during their working life to the level of the year in which the pension starts.  This is done to ensure that a person who is retiring will get a pension that is proportionate to their income level while still working.

The pension provider adjusts the earnings-related pension in payment annually, at the beginning of January, according to changes in the earnings-related pension index. Indexation with the earnings-related pension index secures and even improves the pension’s purchasing power.

Each year, at the beginning of January, Kela adjusts national pensions in payment based on changes in the national pension index. Indexation preserves the purchasing power of national pensions in relation to changes in consumer prices.

 Pension indexes 2019 2020
 Earnings-related pension index2585
(change 1.5%)
(change 1.2%)
 Wage coefficient1.471
(change 1.9%)
(change 2.0%)
 National pension index1617
(change 0.0%)
(change 1.0%)

The adjustments have been round off to one decimal place.

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Citizens’ initiative on indexes rejected

In March 2017, Parliament processed a citizens’ initiative on indexing. The aim of the initiative was to change the earnings-related pension index to a wage index. Parliament rejected the initiative. The Finnish Centre for Pensions estimated, among other things, how the change of index would affect the pension level and pension expenditure, the financing of pensions and the different generations.

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