The route of the pension reform negotiations is curving towards the homestretch. Tensions are mounting. Within a few months, we will learn whether the employees and employers will succeed in stabilizing the Finnish pension system in the negotiations. The alternative is that the negotiations fail. In this case, the pension working group will hand the decision on pensions over to Orpo’s government for the spring mid-term session.

In August, the Finnish Student Union (SYL) and other youth representatives led by Allianssi, the umbrella organisation for the youth sector, published their own solutions for implementing the pension reform. In this way, the younger generation tried to respond to the task assigned for the reform. Among other things, the reform will require a stabilisation of the level of pension contributions, approx. 0.4% adjustment to public finances and drafting of an automatic stabiliser.

The solutions the youth sector proposed received both criticism and praise. In particular, the courage of young people to suggest reforms was appreciated. According to the feedback received, this courage was considered particularly valuable for Finnish discussion on the pension and for the future of the entire system.

Critique is always welcome, but so are alternative suggestions

During the autumn, representatives of the youth sector have carefully examined the feedback received on the results of their pension negotiations – especially the critical views. We have hoped that those who criticise the young people’s views the harshest would respond in kind with openness and transparency and that they would present their own alternatives for solutions.

The easiest way to criticise is to try to overturn the proposals put forward by the reformers without at the same time openly describing their own options. We would prefer to debate options that would fulfil the mandate given to the pension reform and thus be credible.

The time is ripe for new suggestions, as the pension negotiations are still ongoing. The deadline for negotiations is at the end of January 2025.

The main principle of the youth sector’s solution is the courage to make reforms and to face the challenges of the pension system in a way that is fair for all generations. This was accepted as the principle of the young people’s negotiations. After all, there will be some sort of a pension reform in any case. Not reforming the system is not an option.

According to our message, young people are prepared to make even painful decisions that affect themselves in the pension reform. In return, young people expect that the parts of the system, that are the most important for them, will be protected and preserved. Examples of the parts to be protected include making sure that there is pension cover for fragmented and irregular working careers, a pension accrued from degrees, and a pension accrued for home care related to family formation.

Why is the youth sector expressing its concern now?

Tela’s director Jari Sokka dipped into whole new depths in his analysis of the youth sector’s pension solution in his article about pensions published in September. According to Sokka, the younger generation’s desire for change stems from the fact that young people perceive their lives to be a type of an amusement park, in which their enjoyment is based on rapidly available sources of hedonistic pleasure.

The idea is strongly linked to the belief that the population group of young people, that has formed into modern Finnish society, is particularly impatient.

One could spend a lot of time listing the root causes of youth suffering in more depth. The claim that young people are hedonistic should not be swallowed without examining it critically. The uncertainty the younger generation feels stems from many other sources than their search of fast dopamine and pleasure.

It is also not just young people who are criticising the pension system. In recent years, representatives of different political groups and professional and advocacy organisations have taken turns in presenting different earth shattering or change-making reform proposals. So, not only young people.

The general trust of Finns in the pension system and the insurance cover provided by it is not as rosy as we could hope either.

Will we be able to continue to pay pensions in the future?

It is, of course, quite populist to say that the current pension system would in no way be able to finance future generations’ pensions. There are facts that speak for the long-term stability of the pension system and the fact that, over the course of history, the reforms that have been introduced have (fortunately) had an emphasis on benefits whenever necessary.

In general, one might estimate that our pension system is at least in a better state than the structure of many other welfare states.

However, there is concern.

For example, the survey claim, that we will also be able to pay pensions in the future, is only supported by a majority of those already retired with 68% support (Eläkebarometri 2023, ETK). All other age groups consider the long-term sustainable insurance cover of the scheme uncertain to say the least. Some believe that this is even an impossible equation, given the age structure of the population and the challenges associated with the payer base.

In other words, trust in the system is strongest among pensioners – among those who already reap pension benefits. Trust is weakest between the ages of 18 and 34. There is dispersion, but not too much. Although young people are over-represented in the group people who have doubts, long-term stability of the system would require confidence-building measures amongst all working-age people. We could set a goal to have our young people’s pension skills at the same level as the world’s best – as our pension system is estimated to be (7th best in 2024).

Each involved party needs to make their own role in the pension system more visible. In international comparisons, the Finnish pension system receives praise for its transparency and the reliability of its management. However, it is not enough to be reliable only in comparison to other systems: citizens covered by the pension system and those covered by earnings-related pensions also need to be able to rely on the system. We must be active in showing that the concerns are unnecessary, as there are also convincing arguments that speak for the sustainability of the system.

We must stabilise – also the trust

If we are to move towards an ideal situation, we need to raise awareness and create new credible proposals to correct the system in such a way that the weakening of the system would not only apply to those whose pension security is the furthest on the horizon. Young people are now waiting for a reform that does not simply put obstacles in their way as they move towards adequate pension security and prosperous retirement years.

That is why young people are now active in the reform. That is why the youth sector has now presented its own pension solution, which, according to them, would best promote trust in the system also in the future – also taking into account the demanding objectives set for the reform.

Trust is built through genuine actions, and the reform at hand is one of the most important moments for influencing the future of the pension system. This has led to the introduction of ‘radical’ proposals for adapting the system. Let us therefore listen carefully to the message of young people.

Understanding the concerns regarding pension solutions is just as important as listening to those concerns. Without taking young generations into account, the system does not have their trust, and without trust, no social structure can expect a sustainable future.