Pensions | Youth organizations present: Pension increases frozen, money saved for young people

Youth organizations think that the annual increases in occupational pensions should be frozen for a limited period and the money saved should be directed to “generational funding”.

On Tuesday, the youth organizations reported on the outcome of their own pension negotiations. The organizations want to present the young people’s alternative to the actual pension negotiations, which the labor market organizations are currently conducting behind the scenes.

By the end of January, the labor market organizations must submit a proposal to the government for a pension reform that balances the funding of the system in the long term. The goal of youth organizations is also balancing, but they want the means to take into account the views of young people.

Youth organizations propose freezing the occupational pension index for the years 2027–2032. It would mean that there would be no statutory increases to occupational pensions based on the rise in the general price level and wages.

The freeze would not apply to national and guarantee pensions.

According to the youth organizations, it would be fair that the generations already retired should also participate in the savings measures of the pension system.

With the saved money, the organizations would accumulate more wealth in the pension funds, up to ten billion euros. If the target sum were reached before 2032, the freeze on increases would be lifted early. It, on the other hand, would also be continued after 2032 if the target sum was not reached.

Youth organizations do not consider freezing index increases as cutting pensions. In their opinion, the nominal value of pensions should not be cut.

Nine billion of the money saved by the index freeze, the organizations would leave “for historically small age groups”. Increasing pension funds would reduce the pressure to increase pension payments or reduce pension benefits in the future.

The one billion youth organizations would use to finance the pensions accrued from the degrees and home care support. According to the organizations, pensions accumulated during studies, unemployment or child care should not be abolished for savings reasons.

Instead, young people would limit the length of widow’s pensions to a shorter ten years than previously agreed upon.

In addition to freezing the index, the youth organizations would permanently change the system so that the annual increases in occupational pensions would be made in the future only on the basis of the increase in the general price level. Nowadays, they are made based on 80% price increases and 20% wage increases.

The bigger ones in order to obtain returns, youth organizations would increase risk-taking in investing pension funds. They would make it possible to increase the share of equity investments by 10 percentage points to around 55–60% of the value of all investments. A similar idea has also been presented in the actual pension negotiations of the labor market organizations.

The joint presentation of the youth organizations has been signed by Allianssi, the umbrella organization of the youth sector, the Finnish Student Unions’ Union SYL, the Finnish Student Unions’ Union Samok, the Finnish Vocational Students’ Union Sakki, the Finnish Student Alliance Osku, the Finnish School Students’ Union and Finlands svenska skolungdomsförbund FSS.