A pension system cannot only be based on forecasts, the country’s pensions centre chief warned.
Open image viewer
Mikko Kautto, CEO of the Finnish Centre for Pensions. Image: Mimmi Nietula / Yle
Finland’s population forecast has been reversed, showing population growth instead of decline, according to Statistics Finland.
Unlike previous forecasts, the agency estimates that Finland’s population will grow significantly, mainly thanks to immigration.
According to the agency’s new forecast published on Thursday, if net immigration remains at current levels, six million people will be living in Finland in just over 15 years.
According to Mikko Kautto, managing director of the Finnish Centre for Pensions, the possible development presents both opportunities and challenges for the pension system.
“If the current population projection were to come true, the financial outlook for the occupational pension system would improve significantly, even though the new population projection has a lower birth rate than the previous one,” Kautto told Yle.
The forecast shows that Finland’s working-age population and the number of workers would grow strongly. As a result, pension contributions would be much higher than before.
“Contribution income could increase so much that the level of workers’ pension contributions could even be lowered,” Kautto said.
This would ease costs for businesses and could boost employment further. The increase in immigration assumptions is exceptional, and Kautto pointed out that these assumptions are much more uncertain than other projected statistics on factors like birth or death rates.
However, in the long term, the effects of immigration would also be reflected in increased pension payments as immigrants accumulate pension rights.
Pension system must be prepared for surprises
Kautto stressed that the pension system must be prepared for both positive and negative demographic changes and surprises.
“Demographic forecasts vary widely from year to year, and decisions on pension policy cannot be made on the basis of one forecast alone,” Kautto said.
When reforming pension policy, Kautto said it is important to take into account long-term uncertainties and create stabilisation mechanisms that respond to both potential shocks and positive changes.
The current forecast offers a brighter outlook for the pension system, but policy makers should still keep their feet on the ground and be prepared for different developments, Kautto said.
Users with an Yle ID can leave comments on our news stories. You can create your Yle ID via this link. Our guidelines on commenting and moderation are explained here.