Low birth rate calls for rethink of policies

Low birth rates pose a threat for the earnings-related pension system in Finland,said the Finnish Centre for Pensions in a press release.

This is evident in the recently published long-term projections (LTP) by the Finnish Centre for Pensions.

According to the Finnish Centre for Pensions, long-term projections show where earnings related pensions are heading and offers a way to influence their future development.

The future, according to the pension scheme, the future looks bleak when previous time when LTP was published.

“The pension financing outlook is rather stable for the next few deca­des. The low birth rates should be taken seriously, though. Now is the time to think about how to influence the demographic development,” sta­tes development manager Heikki Tikanmäki (Finnish Centre for Pensions).

If the dependency ratio is not improved, the pension contribution will exceed 30% of wages towards the end of the projection pe­riod (2019–2085). Employment, growth in ear­nings and investment returns also play a crucial role in this context.

Despite the unexpected drop in the birth rate, there is no cause for major panic.

Research professor Anna Rotkirch of The Family Federation of Finland ar­gues: “We need to discuss the actual employment rates of the different population groups and how we can secure public services and tax revenues even though the share of the working-age population has decreased.” Rotkirch believes the problem can be tackled through digitalisation and immigration.

The full report will be published in later this year.