The shorter a Finn estimates his or her own life expectancy, the more likely he or she is to apply for a partial old-age pension.
Finns seem to estimate their own life expectancy based on the life expectancy of their parents.
The interest in applying for a partial old-age pension is linked to the life expectancy of the parents.
These data appear from a study published by the Finnish Center for Pensions (ETK) on Monday.
Persons whose same-sex parent has died at a younger age are more active in applying for a partial early retirement pension at the age of 61.
- The research result is internationally unique.
In the past, it has not been possible to link people's pension decisions to register information on the life expectancy of parents, Satu Nivalainen, an economist at the Estonian University of Economics who conducted the study, said in a press release.
The result of the study is significant for the pension system, because the decision to withdraw a partial pension affects the payment of future pensions.
- If people who estimate their life expectancy short increase their pensions earlier, they may have to pay more pensions than estimated in the financial calculations, Nivalainen said.
The financial calculations for pensions are based on average life expectancy.
The calculations are based on the assumption that people do not raise their pensions on the basis of their life expectancy.
In this case, the shorter-lived have time to receive fewer pensions during their lifetime and the longer-lived have more.
This is how the system is balanced.
If those living shorter are systematically raising their pensions as early as possible, they will have to pay more than the calculations assume.
Although such behavior is not advantageous from a pension policy perspective, the choice is optimal for the individual.
According to Nivalainen, the results show that a person can thus be considered at least to some extent as a rational actor.
- People with a shorter life expectancy will benefit from raising a partial old-age pension at the earliest possible stage.
In this way, they will receive more retirement benefits during their lifetime than they would otherwise receive, Nivalainen says.
Men have a shorter life expectancy than women and are also more active in claiming a partial old-age pension
In 2019, nearly 14 percent of 61-year-old men applied for a partial old-age pension.
The corresponding proportion for women was less than nine percent
A partial early old-age pension can be applied for a person over 61 years of age
You can increase either half or a quarter of your accrued pension.
Early retirement, ie before your own minimum retirement age, permanently reduces your pension