A pedestrian with a walker outside a pharmacy in central Helsinki on 11 April 2023. The Taxpayers’ Association of Finland has calculated that the purchasing power of pensioners will improve substantially this year. (Vesa Moilanen – Lehtikuva)

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PENSIONERS in Finland will see a substantial bump in their purchasing power in 2024, according to the Taxpayers’ Association of Finland.

Pensions jumped at the start of the year as a consequence of increases made to the national pension, guarantee pension and earnings-based pension based on the rate of inflation in 2023. The national and guarantee pension will rise by 5.9 per cent and earnings-based pensions by 5.7 per cent year-on-year.

The taxation of pensions has also changed, with the tax rate on low and high pensions rising and that on medium pensions decreasing. The adjustments are less substantial than the index-based increases in pensions, meaning net income will increase for all pensioners.

As inflation is simultaneously expected to let up, the purchasing power of pensioners receiving 922 euros a month will improve by 3.8 per cent, that of pensioners receiving 1,881 euros a month by 4.2 per cent and that of pensioners receiving 5,643 euros a month by 2.8 per cent, according to calculations by the Taxpayers’ Association.

The Ministry of Finance, for example, is forecasting that inflation will slow down to around two per cent in 2024.

The purchasing power of pensioners is therefore set to improve significantly more than the national economy in general. The Ministry of Finance has revealed that it expects the gross domestic product to grow by only 0.7 per cent in 2024.

Although this year is set to benefit pensioners, it will mostly make up for the sluggish development of pensions in the past four years.

Calculations by the Taxpayers’ Association indicate that purchasing power has improved notably only for pensioners receiving less than 1,000 euros a month since 2019 – by 4.5 per cent. The purchasing power of medium and high-income pensioners, by contrast, is projected to return to the level of 2019 in 2024.

Aleksi Teivainen – HT

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