The
Parliament of Finland has approved the Government’s proposal of measures aimed
at raising the rate of employment among persons aged 55 and over. The
legislative reform will raise the minimum age for an extended unemployment
allowance among those born in 1963 and 1964 and abolish the right to an
extended allowance among those born in or after 1965 altogether. The old system
will be replaced by a new model called ‘change security’ for persons aged 55
and over. The new law will be effective from 1 January 2023.
Phasing out of extended unemployment
allowances
Earnings-related
allowances are usually paid for a maximum of 300 to 500 days, depending on the
person’s employment history and age. The extended allowance (often referred to
as the ‘unemployment path to retirement’) refers to a person’s continued right
to an earnings-related allowance after the maximum period. The minimum age at
which a person can start claiming an extended allowance is staggered based on
the year of birth, and the current age limit is either 61 or 62 years,
depending on the year of birth.
The
legislative reform will phase out extended allowances in stages by raising the
age limit for those born in 1963 and 1964 by one year and by abolishing the
right to an extended allowance among those born in or after 1965 altogether.
The reform
will therefore start to affect eligibility for an earnings-related allowance in
2025, when those born in 1963 reach the current age limit of 62 years. Paying
extended allowances will end altogether in 2030.
Change security model
The change
security model will be introduced for persons aged 55 and over as of
1 January 2023. Those eligible for change security will be entitled to
- a
change security allowance corresponding to one month’s salary, - change
security training for a period of up to six months, corresponding in value
to a maximum of two months’ salary, and - five
extra days of re-employment leave.
To be
eligible for change security, you must
- have
been made redundant on financial and production-related grounds on or
after 1 January 2023, - have
been at least 55 years old at the time of your termination, - have
been working for the same employer for at least five years before your
termination, and - have
signed up as a jobseeker with the TE Office within 60 days of your termination.
Please note: The date of
termination refers to the date on which you were given notice of your
termination. In other words, you may need to have signed up with the TE Office
while still employed if you had a particularly long notice period.
Change security allowance
The change
security allowance is equivalent to one month’s salary. Your unemployment fund
will pay your change security allowance as long as you were a member of the
fund on the date on which your contract was terminated, even if you had not
been a member for long enough to qualify for an earnings-related allowance.
Those who do not belong to an unemployment fund will get their change security
allowance from Kela. The amount of the allowance is the same regardless of the
payer.
You will get
your change security allowance even if you find new work straightaway, i.e. you
do not have to be unemployed to receive the allowance. The change security
allowance does not affect your unemployment security or other benefits. The
only exception is social assistance.
Change security training
The TE
Office or the ELY Centre can arrange for a person eligible for change security
to attend training for a period of up to six months. The monetary value of the
training will be equivalent to a maximum of two months’ salary. Taking part in
change security training is voluntary, however, and opting out will not cause
you to lose your unemployment benefits.
You can read more about the legislative reform on the website of the Parliament of Finland.