One of the leading daily Helsingin Sanomat's most widely read stories on Monday examined the problem of Finland's plummeting birth rate and shrinking pension funds.
Trade unions are currently negotiating pension reforms at the behest of Prime Minister Petteri Orpo (NCP). Simultaneously, a working group led by the Ministry of Social Affairs and Health and the Ministry of Finance is also mulling pension reform. The report is due by the end of January 2025.
The reform is driven by Finland's low birth rate, which has fallen from 1.9 to below 1.3. Without immigration, a rate of 2.1 is needed to maintain the population. With the current birth rate, the reform is necessary to keep the pension system functional for younger generations, according to the HS report.
Negotiations aim to achieve an annual adjustment of around one billion euros and to ensure the stability of the agreed contribution level through some automatic mechanism. Options include raising contributions, cutting benefits or boosting birth rates and immigration.
Experts from the Finnish Centre for Pensions (ETK) have calculated that a shortfall caused by declining birth rates could be offset by increasing pension contributions by about one percentage point.
But if the decline in birth rates is not addressed in time, pension contributions would need to be increased by 2–3 percentage points in the future.
"Alternatively, the scale of the issue could be addressed by reducing pension benefits by about three percent," the CEO of ETK, Mikko Kautto, told HS.
Last spring, Kautto told business daily Kauppalehti that the pension system's financing situation could be balanced if annual net immigration were 30,000 people or the total fertility rate rose to 1.5–1.6.
Finland addressed rising life expectancy in its 2017 pension reform. The system links retirement age to life expectancy, with the minimum age currently at 64 years and 9 months, rising to 68–69 years for those born in 2000.
Criticism for plans to cut household tax credit
The government aims to save 100 million euros by tightening the conditions to receive tax credits for household expenses starting next year. The proposed changes have been opposed by multiple organisations, according to a report by Aamulehti.
The plan includes reducing the maximum deduction amount from 2,250 euros to 1,600 euros and lowering reimbursement rates from 40 percent to 35 percent. The out-of-pocket share would increase from 100 euros to 150 euros.
Finland's tax credit for household expenses provides deductions that allow individuals to claim a percentage of costs for services such as cleaning, childcare, nursing care and renovations performed in their homes.
Several organisations, including the Taxpayers' Association of Finland, the Federation of Finnish Enterprises, the Finnish Homeowners' Association and the Finnish Commerce Federation among others have opposed the move.
They argue that the cutbacks could drive the growth of the black market, negatively impact employment in the construction sector, lead people to delay necessary home repairs and make it harder for the elderly to manage in their homes.
However, the VATT Institute for Economic Research said household tax credit mostly benefits high-income households, costing around half a billion euros annually. They view the proposed reduction as a suitable measure for budget adjustments and suggest further cuts could be considered.
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Study: Newspapers most trusted media
Tabloid Ilta-Sanomat reported on a recent study commissioned by the trade association News Media Finland (Uutismedian Liitto) that found newspapers to be the most trusted media across all age groups.
Nearly four out of five respondents considered printed or digital newspapers reliable. Television channels and their online services were trusted by three out of five respondents, while just over two out of five found radio channels and their websites trustworthy.
Social media, YouTubers, and blogs were trusted by only 1–5 percent of respondents.
The study also revealed that nearly 90 percent of respondents prioritise reliability as the most valued quality for news and current affairs media, followed by expertise and independence. Newspapers ranked high in all categories.
The survey, conducted in August by IRO Research, included 1,000 Finnish adults and has a margin of error of over three percentage points.
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