Finland retirement age could gradually rise to 70 under a proposal from finance ministry officials, who say the next government will need to make major changes to public spending, taxation and welfare services to put the country’s finances on a more sustainable path.
The officials have published their traditional set of recommendations for the next government, with their central message focused on the need to follow the broadly agreed debt brake plan and strengthen public finances by between 8 billion and 11 billion euros during the next government term.
Their proposals point to difficult choices across several areas of Finnish society. The suggested measures include cuts to public services and corporate subsidies, higher taxes, a longer working life, changes to childcare benefits, increased skilled immigration and a much wider use of artificial intelligence in government services.
The officials argue that the next government will have to decide which public services, government responsibilities and benefits can be reduced if Finland is to preserve the core functions of its welfare state. They also say that reforming the way services are delivered could be as important as reducing spending itself.
Healthcare, social security and education are among the largest areas of public expenditure, making them key targets for possible savings. The recommendations suggest that Finland should examine whether these services can be organised more efficiently rather than simply continuing with existing structures.
That could have consequences for municipalities and healthcare services across the country. Finance ministry officials support having fewer municipalities and greater cooperation between them when providing services. One possible result could be the centralisation of specialised healthcare and the closure of some hospitals.
The officials also raise the possibility of the state taking responsibility for organising healthcare. Such a change would alter the current division of responsibilities and could become part of a wider debate over how Finland should organise public services in the future.
Raising the retirement age is one of the most significant proposals. The officials suggest gradually increasing the lowest retirement age to 70, with the age rising by six months for each age cohort.
According to their assessment, the measure could increase the number of people in work by between 50,000 and 120,000. A larger workforce would strengthen tax revenues and could also reduce some of the pressure created by an ageing population and rising public expenditure.
The proposal would nevertheless represent a substantial change to working life in Finland. Raising the retirement age would mean that many people could remain in employment for considerably longer before becoming eligible for retirement at the lowest age.
The officials also see immigration as part of the response to Finland’s labour and economic challenges. They propose making it easier for highly skilled workers to move to the country, with the aim of increasing the size and productivity of the workforce.
Another proposal would abolish the home care allowance. The benefit currently supports families who care for young children at home instead of using municipal early childhood education. Ending it would therefore represent a significant change for families who rely on the allowance when deciding how to arrange childcare.
The recommendations also include changes to government support for companies. Finance ministry officials propose cutting corporate subsidies while directing more capital towards growth companies that are not listed on the stock market.
They suggest selling between 2 billion and 3 billion euros worth of state-held shares and using the money to invest in unlisted growth companies. The proposal would change how some state-owned assets are used, with the aim of supporting businesses that could contribute to future economic growth.
Artificial intelligence also features prominently in the recommendations. The officials want AI to be adopted on a much larger scale across public administration, including areas such as taxation, social security and healthcare.
The potential financial benefits could be significant. However, the ministry officials have also made clear that the estimates are too uncertain to be included as dependable savings when calculating the fiscal adjustments required during the next government term.
That distinction is important because AI is increasingly being presented as a way to make public administration more efficient. The officials’ assessment suggests that Finland should pursue wider use of the technology but should not build its budget plans around savings that have not yet been demonstrated.
The proposals also include measures aimed at addressing climate-related costs. Finance ministry officials suggest increasing taxation on wood burning, fossil fuels and peat as part of efforts to reduce emissions.
The officials warn that Finland could face additional costs if it cannot meet its European Union climate targets through domestic action. In that situation, Finland could have to purchase emissions or carbon sink units from other EU countries.
The recommendations therefore connect climate policy with public finances. Meeting environmental targets could require additional spending if domestic reductions are insufficient, adding another financial pressure at a time when the government is already looking for ways to reduce the deficit.
Taken together, the proposals represent a broad examination of how Finland’s welfare state is financed and organised. Rather than relying on one large reform, the finance ministry officials point to a combination of spending reductions, tax changes, longer working lives, immigration, changes to benefits and productivity improvements through technology.
The recommendations are not government decisions. They are proposals prepared by finance ministry officials for consideration by the next government. Political parties will ultimately have to decide which measures they support and how they should be implemented.
The debate is likely to reach well beyond government budgets. Changes to the retirement age could affect people’s working lives, while reforms to healthcare, childcare benefits and local government could directly affect households and communities across Finland.
At the centre of the proposals is a difficult question for the next government: how can Finland maintain the services associated with its welfare state while bringing public finances back towards a sustainable balance? The answer is likely to involve choices that affect both government spending and the everyday lives of people across the country.
