Finland Times

Labour leaders Antti Palola and Advocacy Director Minna Helle are seen to come out after the negotiation on Thursday night. Photo – Str / Lehtikuva.

Labour market organisations have reached an agreement on the retirement age during a negotiation on the pension reform system.

After a lengthy deliberation, the organisations reached the consensus to increase the age to 65. The new retirement age will be applicable to those born in 1955 and onwards.

As per the reform plan, the retirement age will increase progressively by three months per year, so that for a person born in 1955 the age will be 63 years and three months and for a person born in 1958 it will be 64.

The agreement was reached between two trade unions – Central Organisation of Finnish Trade Unions-SAK and STTK – and the Confederation of Finnish Industries and Local Government Employers-KT. Akava, a trade union confederation of affiliates for highly educated people, did not take part in the negotiations on lifting the retirement age.

The agreement also paved the way for abolishment of deduction of employee’s pension contribution. This means, an employee will start to accumulate higher pension at an earlier age.

The agreement will also see earnings-related pensions starting to accrue at the age of 17, instead of the current age of 18.

Also, those involved in lengthy physical and demanding work will be liable to retire under certain conditions after a career spanning 38 years.

The labour organisations will on Friday present the proposals to their respective boards for approval. The new pension legislation is expected to come in force in 2017.

The government is keen on the labour organisations reaching an agreement, as the pension reform is crucial for handling the sustainability gap of public finances.