Free for publication 28.7.2020, 7.00
The younger generations’ trust in the pension system is wavering, and not without reason. The measures for achieving a more sustainable system must be found somewhere other than young people’s pockets.
The Finnish pension system is an intergenerational agreement where the benefits and costs are meant to be shared fairly between the generations. The justification for our welfare state is based on the fact that each generation can trust society to insure them against the risks of life. Now the young generations’ trust in the pension system is wavering, and not without reason.
While some of the pension contributions are put into funds, most of today’s pensions are funded by today’s workers and employers. The demographic changes put pressure on the pension system and the younger generations as the number of retirees increases while the number of employees decreases. Intergenerational equity must be the starting point when developing the system, and this must be done more on young people’s terms.
“The measures for achieving a more sustainable system must be found somewhere other than young people’s pockets. Increasing pension contributions is not fair, as it will increase the inequality between generations and the younger and smaller generations’ payment burden. Insuring one generation cannot weaken the position of other generations,” SYL’s President Tapio Hautamäki emphasises.
Increases to the pension contributions have created pressure to reduce other taxes, which may lead to a reduction in the welfare state’s services and benefits. The younger generations must also have the right to accessible, high-quality services and a comprehensive social security.
Pensions include strong protection of property, and therefore the level of pensions is seen as an achieved benefit in society. In terms of intergenerational equity it is justified to discuss the available methods for protecting the pension system. Increasing the progressive taxation of pensions would bring additional resources to society’s other insurance systems, such as the funding of social and health care services, which all generations benefit from.
The pension system should be equal and encourage longer careers. Primarily the pension system should be strengthened by extending careers, for example by making it easier to retrain and to work part time at the end of one’s career. The quality of working life should also be improved by investing systematically in wellbeing and coping at work. For students, the main thing is to offer efficient mental health services with a low threshold in order to support them in coping with their studies, which also means supporting future employees in the long run. Today’s healthy student is tomorrow’s healthy employee – the most important resource of our shared, sustainable pension system.
A sustainable pension system benefits all generations and a stable society. The younger generations also have the right to enjoy the benefits that the pension system brings in the future, and the system cannot be developed sustainably without young people. Intergenerational equity must be the starting point when developing the pension system.
President Tapio Hautamäki
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