Occupational Pension Schemes
Työnantajan ottamat lisäeläkevakuutukset
Coverage
Voluntary participation
- Group pension insurance can be voluntarily arranged by employers for their employees or specific groups. Tax legislation defines that group pension insurance must cover a collective group of at least two persons. The insured group can be defined on the basis of, for example, the employee’s occupational status, profession or line of industry.
- The employer can take out individual pension insurance for an employee.
Financing
General finances
- Fully funded scheme financed by contribution payments and capital revenues.
Contribution rates
- Contributions are paid by the employer and, in some cases, the employee; employee contributions may amount to half of the total annual contribution payment.
- Annual pension contributions have no maximum amount, as long as the purchased occupational pension provision is at a reasonable level according to the tax authorities.
State support
- Contributions are tax-deductible.
- If contributions are shared between employer and employee, contributions are tax-deductible only if pension plans adhere to the qualifying conditions specified in the income tax legislation.
Administration
- Group pension insurance may be arranged with an industry-wide or a company pension fund or a life insurance company or as a book reserve.
- The ‘Financial Supervisory Authority’ supervises pension providers.
Qualifying Conditions
- The age for the take-up of occupational pension benefits usually follows the income tax legislation. For tax-deductibility of pension contributions, the retirement age must equal the retirement age of individual pension schemes (i.e. the age at which the cohort’s obligation for mandatory insurance in statutory pension schemes ends; it is age 70 for persons born after 1961) if contributions are shared between employee and employer. If the employer pays the entirety of contributions, the retirement age may be lower and there is no earliest retirement age defined for deductibility in the income tax law.
Benefits
Pension payments
- Benefits can be defined benefit (DB) or defined contribution (DC); new group pension plans are mostly defined contribution (DC) plans.
- The occupational pension paid from the group pension insurance is typically either a supplemental occupational pension paid out to the employees or a pension with the intention to lower the employees’ retirement age. It can also be a combination of the two.
Taxation and social security contributions
- Pension payments are subject to income tax.
- Mandatory contribution for sickness insurance’s medical care insurance component.
Coverage
Financing
Administration
Qualifying Conditions
Benefits
Voluntary participation
- Group pension insurance can be voluntarily arranged by employers for their employees or specific groups. Tax legislation defines that group pension insurance must cover a collective group of at least two persons. The insured group can be defined on the basis of, for example, the employee’s occupational status, profession or line of industry.
- The employer can take out individual pension insurance for an employee.
General finances
- Fully funded scheme financed by contribution payments and capital revenues.
Contribution rates
- Contributions are paid by the employer and, in some cases, the employee; employee contributions may amount to half of the total annual contribution payment.
- Annual pension contributions have no maximum amount, as long as the purchased occupational pension provision is at a reasonable level according to the tax authorities.
State support
- Contributions are tax-deductible.
- If contributions are shared between employer and employee, contributions are tax-deductible only if pension plans adhere to the qualifying conditions specified in the income tax legislation.
- Group pension insurance may be arranged with an industry-wide or a company pension fund or a life insurance company or as a book reserve.
- The ‘Financial Supervisory Authority’ supervises pension providers.
- The age for the take-up of occupational pension benefits usually follows the income tax legislation. For tax-deductibility of pension contributions, the retirement age must equal the retirement age of individual pension schemes (i.e. the age at which the cohort’s obligation for mandatory insurance in statutory pension schemes ends; it is age 70 for persons born after 1961) if contributions are shared between employee and employer. If the employer pays the entirety of contributions, the retirement age may be lower and there is no earliest retirement age defined for deductibility in the income tax law.
Pension payments
- Benefits can be defined benefit (DB) or defined contribution (DC); new group pension plans are mostly defined contribution (DC) plans.
- The occupational pension paid from the group pension insurance is typically either a supplemental occupational pension paid out to the employees or a pension with the intention to lower the employees’ retirement age. It can also be a combination of the two.
Taxation and social security contributions
- Pension payments are subject to income tax.
- Mandatory contribution for sickness insurance’s medical care insurance component.
Legal Basis: The Income Tax Law (30.12.1992/1535).