The Finnish government has decided not to reduce pensioner housing support or child benefits, rejecting cost-saving proposals from the Social Insurance Institution of Finland (Kela). The decision comes after careful consideration of the welfare impact on pensioners and families.
Kela had suggested several measures to trim costs. These included merging pensioner housing support with general housing support, adjusting child benefit distribution, and limiting compensation for certain outpatient medical services. The proposals were submitted at the request of Sanni Grahn-Laasonen, Minister of Social Security.
According to Yle and Helsingin Sanomat, Prime Minister Petteri Orpo’s government concluded that reducing housing or child benefits further would be excessive. Earlier cuts had already affected general housing support, with students removed from eligibility and pensioner housing support partially reduced in the spring 2024 spending framework.
Kela estimated that merging pensioner housing support with the general housing scheme could save €290 million per year. Approximately 47,000 recipients would lose support, including 13,000 pensioners living in owner-occupied homes. Others would be excluded due to assets exceeding €50,000.
Government sources highlighted the practical challenges for pensioners. Unlike wage earners, older adults cannot easily improve their income, sell property, or switch to rented housing. Kela had noted these risks in its memorandum and suggested a phased approach to avoid abrupt consequences.
Kela also recommended changes to child benefits. Suggestions included prioritizing parents under 30, favoring firstborn children, reducing support for third and subsequent children, or increasing taxation on child benefits.
The government, however, has established a working group to review child benefits without any immediate savings target. No reductions will be implemented at this time.
Among Kela’s proposals, only changes to compensation for outpatient medical services are under consideration. Kela highlighted the €30 general practitioner reimbursement as an area for potential adjustment.
Additionally, Kela proposed ceiling prices for therapy services like physiotherapy, psychotherapy, and speech therapy. Costs have risen from €700 million to €850 million annually due to price increases and growing demand, particularly for neurodevelopmental therapies. Kela noted this could be addressed directly in procurement without legislative changes.
Kela reviewed its own operating costs but did not propose direct cuts. The ongoing Eepos IT overhaul project will generate efficiency gains in the coming years.
The government’s approach marks a departure from standard procedure, as Kela had not previously been asked to submit a comprehensive list of potential budget cuts.
Helsingin Sanomat reports that the only Kela proposal moving forward in upcoming budget negotiations is the reduction of compensation for medical services. All other recommendations, including changes to pensioner housing support and child benefits, will not be pursued.
