THE GREEN LEAGUE has called for a raise on all but the lowest pensions.
Atte Harjanne, the chairperson of the Green Parliamentary Group, on Wednesday justified the proposal with intergenerational fairness, referring to the spending cuts the government has laid out for student and unemployment benefits.
“Finland does have poor pensioners but also pensioners who are in a perfectly good situation. It’d be preferable if they participated in the effort to balance public finances,” he explained.
The opposition party is proposing that the tax rate on annual pensions exceeding 13,500 euros be increased by 0.52 percentage points. Harjanne told that the effect of the tax hike would be equivalent to reducing the 5.7-per-cent increase that is to be made to pensions at the turn of the year due to cost of living by one point.
A supplementary tax of 5.85 per cent is already levied on annual pension income exceeding 47,000 euros in Finland.
The proposal received no support from other political parties on Thursday.
Minister of Finance Riikka Purra (PS) and Minister of Social Security Sanni Grahn-Laasonen (NCP) shot it down during a question-time debate in parliament on Thursday, the latter reiterating that the government is looking to target spending cuts on population groups that have the opportunity to improve their position through employment.
Purra, in turn, argued that many recipients of low earnings-based pensions already are not rewarded sufficiently for their long careers given that people on national and guarantee pension can have almost the same net income despite significantly shorter careers.
Annika Saarikko, the chairperson of the Centre Party, said the Green League appears to be detached from the lives of low-income pensioners, adding that many pensioners with monthly income of around 1,000 euros are already between a rock and a hard place.
“Intergenerational fairness is important, but creating divisions isn’t a way to increase it. You shouldn’t be pitting generations against each other,” she stated. “It’d be wrong to meddle with the [employment pension index] when it works to the benefit of pensioners. The oldest population groups don’t have the opportunity to earn additional income unlike many students, for instance.”
The Left Alliance agreed with the Green League that the government is disproportionately targeting students, the unemployed and people with sicknesses with its spending cuts. Chairperson Li Andersson viewed, though, that introducing a higher tax on pensions is not a means to address the situation.
“The entire opposition should be focusing its resources on preventing or making more reasonable the cuts the government has proposed for other groups.”
The Finnish Centre for Pensions has calculated that the pensions received by current pensioners are on average many times higher than the pension contributions they made during their careers. In Finland, earnings-based pensions are funded primarily by the pension contributions made by current employees and employers, meaning pensioners have not technically saved their own pensions.
Aleksi Teivainen – HT