How to make pension systems more robust – Automatic adjustment mechanisms as a response to longevity
Without adaptation, increasing life expectancy entails cost-increases for statutory pension systems. In Finland, earnings-related pensions have undergone a major reform by adapting both retirement ages and the pension formula to increased life-expectancy. The European Commission’s Annual Employment and Social Developments Review lifts up the Finnish reform as an example of how to incentivize longer working lives. Here I explain the essence and motivation behind automatic adjustment mechanisms.
Mikko Kautto speaks about the Finnish pension reform and about the debate around the reform:
The Finnish earnings-related pension system in twenty minutes
We prepared this video together with Joonas Lehtipuu from Vitamine Comp Ltd for a conference on pension systems and their management that was arranged in Melbourne, Australia, on 5-6 July 2012.
The conference was organised by Monash University (Melbourne, Australia), in partnership with the Commonwealth Scientific and Industrial Research Organisation (CSIRO) and the University of Warwick (UK).
Unfortunately I was unable to attend the conference, so the organisers came up with the idea of me sending a video instead. I was given the task to discuss the structure of the Finnish earnings-related pension system in about fifteen minutes.
This is how the video turned out.
More on pension provision
The Finnish Centre for Pensions is a statutory co-operation body, expert and producer of joint services for the development and implementation of the earnings-related pension provision.