Browsing by Author "Nurminen, Minna"

The financial wellbeing of the Finnish pensioners has improved along the maturation of the earnings-related pension scheme. However, pensioners form a heterogenic group and particularly those entitled to the statutory minimum pension, the full national pension, still face a relatively high risk of poverty. But despite the low level of income, many low-income pensioners also are financially satisfied. Furthermore, old pensioners tend to be more satisfied than the young. The phenomenon has been described as the satisfaction paradox. The guarantee pension reform of 2011 represents the latest change in the Finnish national pension plan. The reform increased the monthly pension by up to 17 per cent for a single household entitled to the full national pension, and by up to 32 per cent for a pensioner living in couple. This study investigates whether the subjective financial wellbeing (SFW) of the Finnish old-age pensioners aged 65–85 entitled to the full national pension has changed after the guarantee pension reform. The data consists of two postal surveys which were conducted both before (2010) and after (2013) the guarantee pension reform by the Social Insurance Institution of Finland (Kela). The research question is studied with the help of common quantitative methods, such as cross-tabulations and a two-way-analysis of variance. The multivariate analysis enables controlling for socio-economic and demographic factors which improves the reliability of the examination. The subjective financial wellbeing perspective is complemented by three indicators of poverty: the subjective approach, the relative income method and the social assistance recipiency -criterion. The main result is that the subjective financial wellbeing of the pensioners eligible for the full national pension has improved after the guarantee pension reform. More pensioners are financially satisfied and find it easier to make ends meet in 2013 than in 2010. The multivariate analysis illustrates that the subjective financial wellbeing of the elderly is strongly influenced by income and certain other factors. Young age and poor health predict low subjective financial wellbeing. The result supports the satisfaction paradox. Living alone and on rent also seem to relate to low subjective financial wellbeing. Other measures of poverty show a decline from 2010 to 2013 as well. Fewer pensioners are subjectively poor in 2013 than in 2010. Both the prevalence of relative poverty and its degree (poverty gap) have decreased since the reform. Nevertheless, more than half of the pensioners are still defined as ‘poor’ according to the common 60 per cent of median income -threshold in 2013. The share of pensioners who are poor both according to objective and subjective measure (multiple indicator) has shrunk. The share of pensioners who receive social assistance has remained the same. Although the structure of the study does not permit the identification of causality, there is a significant likelihood that the guarantee pension reform has influenced the subjective financial wellbeing of the pensioners. Less than a fifth of all respondents have low subjective financial wellbeing after the reform, compared to 23 per cent in 2010. However, the profile of the average national pension beneficiary is changing. There will be fewer former housewives and more men with a disability pension and/or unemployment background in the future. If the detected satisfaction paradox is explained by the relatively modest reference groups and backgrounds of the old pensioners, future low-income pensioners are likely to be more dissatisfied. In addition to ensuring sufficient financial old-age security, also the other factors that are linked to pensioners’ subjective financial wellbeing should be considered. For instance, promoting high-quality public health services and care is likely to help particularly the low-income and single pensioners.