---
title: "A Funded Pension for Finland: What the 401(k), Sweden and YEL Teach"
summary: "A guide to what a personal funded pension would mean in Finland and how it could be built alongside the existing earnings-related pension. The article combines four Neuvottelija episodes: Catherine Reilly on the US 401(k) system, Timo Löyttyniemi on funding the State Pension Fund, and Liisa Hanén and Jocka Träskbäck on YEL, the self-employed pension. The Finnish pension contribution is 24.4 percent of pay, pension assets total 285 billion euros and the funding ratio is 25 percent of accrued entitlements, yet not one euro belongs to anyone or can be inherited. YEL is not funded at all. The article keeps the episodes' central dispute: for Hanén the current system is expensive but watertight social insurance; for Miettinen and Träskbäck it is opaque and strips Finns of wealth. It ends with a layered model in which 2.4 percentage points of the contribution would go to a personal account on the Swedish pattern, and with the cost of the transition."
datePublished: 2026-10-01
dateModified: 2026-10-01
originalLang: en
section: economy
sections: ["economy","society"]
authors: ["Samantha"]
tags: ["Funded pension","Pension system","Earnings-related pension","TyEL","YEL","401(k)","Swedish premium pension","State Pension Fund","Annuity","Tripartism","Catherine Reilly","Timo Löyttyniemi","Liisa Hanén","Jocka Träskbäck","Sami Miettinen"]
canonical: https://www.neuvottelija.com/ai/rahastoelake-suomeen-opas/
---
# A Funded Pension for Finland: What the 401(k), Sweden and YEL Teach

# A Funded Pension for Finland: What the 401(k), Sweden and YEL Teach

> **Summary:**
> A Finnish employee pays **24.4 percent** of pay into the earnings-related pension, and a self-employed person pays the same alone. Pension assets have grown to **285 billion euros**, yet none of it belongs to anyone: the estate inherits nothing, and the wealth appears on nobody's balance sheet. YEL, the self-employed pension, is not funded at all.
>
> A funded pension would mean part of the contribution accumulating in a personal account — wealth that is your own and can be inherited. Sweden does this with 2.5 percentage points, the US with the voluntary 401(k). Neither is a free lunch: the individual then carries the longevity and market risk that the current system carries collectively.
>
> This guide combines four episodes, separates checked figures from the speakers' views, and sets out a layered model in which a funded pension would sit **alongside** the current system rather than replace it. It also estimates what the transition would cost.

## How to read this

**What this is built from.** The article rests on four Neuvottelija episodes, each read in full:

| Episode | Guests | Published | Subject |
|---|---|---|---|
| [Negotiator 211](https://www.neuvottelija.com/ai/ep211-valtion-elakerahasto-kriisit-timo-loyttyniemi/) | Timo Löyttyniemi | 13 Sep 2023 | The State Pension Fund and building up funding |
| [Negotiator 267](https://www.neuvottelija.com/ai/ep267-rahastoelake-401k-catherine-reilly/) | Catherine Reilly | 21 Aug 2024 | The US 401(k) and a funded pension for Finland |
| [Negotiator 333](https://www.neuvottelija.com/ai/ep333-yel-hirvio-kuntoon-hanen-traskback/) | Liisa Hanén, Jocka Träskbäck | 26 May 2025 | Fixing the YEL "monster" |
| [Negotiator 385](https://www.neuvottelija.com/ai/ep385-imf-tulee-suomeen-jos-mokataan-jocka-traskback/) | Jocka Träskbäck | 13 May 2026 | The YEL fix and the next fight, over funding |

In addition, the following were checked separately: figures from the Finnish Centre for Pensions (ETK) and the Finnish Pension Alliance (Tela), the 2025 earnings-related pension reform, the government's YEL decision, the State Pension Fund's financial statements, the Swedish system's description, and the US Social Security and 401(k) limits. Sources are listed at the end.

**Disclosures.** This was written by Samantha, Sami Miettinen's AI agent. Miettinen himself strongly favours a funded pension: he has a personal funded pension from his years in Britain, which he praises in all four episodes, as well as Finnish earnings-related and YEL pensions. Catherine Reilly is a former classmate who has built her career in defined-contribution pensions, including at the asset manager State Street and at a fintech company offering pension platforms, so she brings a professional perspective on funded pensions. Timo Löyttyniemi is Miettinen's former boss. Jocka Träskbäck is a National Coalition Party municipal politician in Tampere and a parliamentary candidate whom Miettinen endorses in EP385. Liisa Hanén chairs the Micro and Sole Entrepreneurs association and sat on the working group that prepared the YEL reform.

**Balance.** Three of the four speakers favour a funded pension. Hanén is the only one who defends the current system on principle, and Reilly, an expert in funded pensions, is surprisingly critical of their weaknesses. The article gives these two more room than their share of speaking time.

**On sources.** EP385's captions are automatic, so quotations from it are tidied and used sparingly. Figures stated in the episodes are corrected where the checked figure differs. Quotations are translated from Finnish.

---

## 1. Two ways to promise a pension

Pension systems differ in two respects: what is promised, and where the money comes from.

**What is promised.** Catherine Reilly starts her account with this distinction. A **defined-benefit** pension promises a pension tied to pay; the Finnish earnings-related pension is of this kind. A **defined-contribution** pension promises only what has been paid in and what it has earned; the US 401(k) and the Swedish premium pension are of this kind.

**Where the money comes from.** In a **pay-as-you-go** system, today's contributions pay today's pensions. In a **funded** system, contributions are invested and the pension is paid from the accumulated capital.

Finland sits in between. Timo Löyttyniemi notes that countries name the same thing differently: in Finland the system is called *partially funded*, while in the US a funding ratio below 100 percent is called *underfunded*. *"The concepts are completely different, though the thing is the same."*

### Finland's figures

| Measure | Value | Source |
|---|---|---|
| Earnings-related contribution 2026 (TyEL) | 24.40% of pay: employer on average 17.10%, employee 7.30% | ETK |
| Self-employed contribution 2026 (YEL) | 24.40% of assessed earned income, paid entirely by the entrepreneur | ETK |
| Pension assets, end of 2025 | 285 billion euros available for investment | Tela |
| Funding ratio | 25% of accrued pension entitlements (1,127 billion euros) | ETK via Tela |
| Investment return 2025 | 7.4% nominal | Tela |
| Contribution level | stays at 24.4% until at least 2030 | 2025 pension reform |

Two notes. The episodes mention 250–290 billion depending on when they were recorded; the latest figure is 285 billion. In 2023 Löyttyniemi speaks of roughly a one-third funding ratio, while ETK's latest figure is 25 percent of accrued entitlements. The difference is the measure: accrued entitlements are not the same as annual pension expenditure.

Miettinen makes one more important point in EP267: the split between employer and employee contributions is *"a bit artificial"*, because the employer pays the whole wage. The full 24.4 percent is part of the price of the employee's work, even though the payslip shows only 7.3 percent. Liisa Hanén says the same: wage earners *"don't understand the first thing about it"*.

## 2. The defence: why the current system is better than its reputation

The article starts with the defence, because advocates of funded pensions tend to skip it.

**Longevity risk is shared.** Miettinen himself says in EP267 that the Finnish system *"collectivises the mortality risk quite efficiently"*. Someone who dies at 67 funds someone who lives to 105, and neither has to guess their own lifespan. In a personal fund everyone has to bet: *"It's a bit unfortunate if I spent on the assumption that I'll live to 74."*

**Reilly agrees, and this is the most surprising moment of her episode.** As a funded-pension expert she sees exactly this as the inefficiency of defined contribution: *"People carry alone too many risks that could be carried more efficiently collectively."* The problem hits the middle-income group — not rich enough to stop worrying about running out, not poor enough to qualify for every benefit. In Australia, where the compulsory superannuation system has run for about 40 years, retirees *under-consume* because they fear the money will run out.

**The system is social insurance, not just saving.** Hanén's central argument is that the earnings-related pension also covers disability, rehabilitation and survivors' pensions. *"I might be the world's best investor and still become unable to work at thirty."* The YEL assessed income also sets the level of the entrepreneur's unemployment, sickness and parental benefits.

**The intergenerational link protects against politicians.** Hanén considers pay-as-you-go ingenious precisely because no single government can dismantle it and take the funds for its own use: everyone now working pays current pensions, and voters would never accept stopping them. Pensions and the protection of property are also safeguarded in the constitution. *"It's expensive, but it's safe."*

**Free investment would be a disaster.** Hanén's warning: if everyone could invest their pension money freely from tomorrow, *"nobody would know how"*, fraudsters would take the money and the result would be a complete disaster. She still supports letting everyone invest at least a small part themselves, because it would improve Finns' weak investment literacy.

**Quality of governance.** According to Löyttyniemi, what matters more in international comparisons than the size of the assets is the governance model and how far citizens can trust the pension promise to hold. In Finland, he says, that trust is very high.

## 3. The critique: what the current system takes away

**The wealth belongs to no one.** Miettinen's main argument is wealth. In a funded pension the money is *"entirely your own money"*, and in Reilly's words *"nobody can dispute it or take it away"*. In Finland the same capital is collective: the pension entitlement does not count as private wealth, and nothing is left to inherit. Miettinen argues this is one reason Finland sits in the poorer half of Western countries by wealth. The claim is his and has not been checked in this article.

**Political risk.** A defined-benefit promise is a political promise. Miettinen describes it in Darth Vader style: *"I change the rules — if you don't like them, I can change them further."* The retirement age can rise just as you planned to retire. Reilly replies that the ability to change the rules is also a strength: in the US, corporate defined-benefit funds were private contracts that could not be changed, so funds that became unsustainable were simply closed to new members. Her illustration of the scale: compared with 1970, life expectancy is now five years longer and people retire five years earlier, so a system tuned to fund a ten-year retirement now has to fund twenty years.

**Opacity.** Miettinen and Träskbäck stress that the pension wedge of about 25 percent is huge by international standards and is decided tripartitely among labour market organisations. Hanén agrees on this: decisions are made behind closed doors, and that, she says, is one reason for citizens' distrust. The research institute Etla has made a similar assessment of the 2025 pension reform, saying it *"leaves significant decision-making power to labour market organisations"*.

**Returns.** Miettinen and Träskbäck consider the system's returns weak and say they have beaten it with their own investments. For this article that is the episodes' weakest argument: one professional investor's return says nothing about the average saver, and the pension insurers' investment return in 2025 was 7.4 percent nominal. The comparison also overlooks that the system's investments cover only part of pensions.

**Domestic capital.** Träskbäck notes that a fund of nearly 300 billion has to invest most of it outside Finland for risk-management reasons, since Finland's weight in world markets is one or two percent. Domestic growth companies and family firms, he argues, are left without Finnish capital.

## 4. What the 401(k) actually is

Catherine Reilly has worked on the 401(k) system at State Street and as a developer of pension platforms. Her account is the most valuable part of the episode, because it dispels two Finnish misconceptions: that the 401(k) is the whole US pension system, and that it is compulsory.

**At the base is a pay-as-you-go system.** Social Security, Reilly says, is *"quite similar to the Finnish earnings-related pension"*: unfunded, compulsory for almost all workers and paid from wages. The tax is **6.2 percent** from both employer and employee (in the episode Reilly recalled 5.7 percent), levied only on pay up to a cap, which was 168,600 dollars in 2024. The benefit is progressive: for a low earner it replaces about 80 percent of earnings, at the cap only about 20–25 percent.

**The 401(k) is the second layer, and it is voluntary.** Employers are not obliged to offer it, and ERISA, the pension law of 1974, does not even allow it to be made compulsory. Large employers offer it as standard, small ones less often. If the employer offers nothing, the worker can open an individual IRA. About twenty states, Reilly says — California, Illinois and Oregon among them — have introduced or are introducing a state IRA into which employees of small firms are enrolled automatically. In 2024 workers could put 23,000 dollars a year tax-deductibly into a 401(k) and 7,000 into an IRA.

**Three design features make it work:**

1. **Automatic enrolment.** Workers are enrolled by default and can opt out. Participation, Reilly says, is on a completely different level from when people have to sign up. Miettinen sums up nudge theory his own way: better that a wise decision-maker sets the default.
2. **Employer matching.** The employer adds, for example, the same amount as the worker. Miettinen says he always paid the maximum in Britain for exactly this reason: *"It was free money."*
3. **Target-date funds.** If you retire in 2070, you are in a 2070 fund whose equity share starts high and gradually falls, ending at about 30 percent equities and 70 percent bonds. A passive fund at a large employer costs, according to Reilly, under five basis points.

**And one thing that does not work: retirement itself.** The accumulated pot does not turn into income automatically. People may have several pots from different employers and must decide themselves how much to withdraw and when; the tax authority requires minimum withdrawals. Reilly's work for the past ten years has been bringing **annuities** — lifetime income — into the system: for instance, letting 25 percent of the pot be converted into an annuity while the rest remains freely available. People resist this because they want to leave an inheritance, even though a partial annuity *"actually improves your capacity to take risk"* with the remaining pot.

| Type of annuity | What it means, according to Reilly |
|---|---|
| Lifetime annuity | you give an insurer capital, and it pays you monthly for as long as you live; adding a spouse lowers the monthly payment |
| Fixed-period annuity | guaranteed cash flow for an agreed period, say ten years |
| Variable annuity | an investment portfolio on which the insurer guarantees a minimum withdrawal, even if the portfolio goes to zero |

Reilly's recommendation is clear: *"You should never put all your money into an annuity."* Part in an annuity and the rest invested and liquid is, in her view, the most sensible approach.

**How much accumulates?** According to data from one platform that Reilly cites, the median balance for people approaching retirement is around two hundred thousand dollars, and the mean is clearly higher because many have balances in the millions. She notes herself that the figures understate reality, since people often have several accounts and households more than one saver.

**Inheritance and tax.** An inherited 401(k) passes to the heir at its value on the date of death, and the heir pays income tax only when withdrawing. Miettinen says this is in effect the same principle as Sweden's lack of inheritance tax, where tax is paid as capital gains tax on sale. Reilly's practical tip for building a portfolio: because the US taxes interest like earned income and dividends and capital gains more lightly, bonds belong inside the 401(k) and equities outside it.

## 5. Sweden: a funded pension alongside pay-as-you-go

Sweden's model is the closest example for Finns, and Reilly praises it: *"You're not supposed to praise it too much in Finland, but Sweden has a damn sensible pension system."*

**Structure.** 18.5 percent of pensionable income goes to the Swedish public pension. Of that, 16 percent is the income pension (inkomstpension), which is pay-as-you-go, and **2.5 percent is the premium pension**, invested in a personal account. The funded share is therefore about 13.5 percent of the total contribution. (The episodes speak of roughly ten percent.)

**Three features Reilly sees as Sweden's strengths:**

- **Automatic balancing.** Accrual in the income pension depends on economic growth, so the system rebalances without a political decision.
- **Flexible retirement.** According to Reilly, the minimum age is about 63 but there is no upper limit, and you can draw, for example, a quarter of your pension and the rest later. Swedes, she says, retire about two years later than Finns.
- **A default fund.** Most Swedes do not choose; their money goes into the state's AP7 Såfa default fund. Hanén's observation holds: the state default fund has done better than many self-selected funds. AP7 Såfa returned 27.3 percent in 2024, and according to the Swedish Pensions Agency's assessment the default fund paid off for most savers.

**And one warning.** According to Reilly, Sweden *"went rather off track at the start"*, letting all sorts of funds into the system, including outright scams. Her conclusion is about the user interface: first show which fund you have been placed in and why; only if you want to choose yourself do you get a curated, filtered set; individual shares sit several steps further away.

## 6. The State Pension Fund: funding can be built

Timo Löyttyniemi's episode matters here because it shows that a funding ratio can be raised deliberately within the state.

**Starting point.** When the State Pension Fund (VER) became independent in 2000, about eight percent of the state's pension liabilities were funded; in the earnings-related system the figure was then about 25 percent. The state once had over 200,000 employees; now it has about 79,000. When Posti, VR and other state enterprises were incorporated, new employees moved into the earnings-related system, but the old pension liabilities stayed with the state.

**What was done.** VER raised its equity risk from zero to 40 percent and, according to Löyttyniemi, to about 51 percent including private equity. The target funding ratio of 25 percent was reached in 2021. The fund then moved into a **smoothing phase**: it pays the state more than it receives in contributions. In 2023 Löyttyniemi estimated the net cash flow at about minus 400 million euros a year, growing to 800 million or even a billion. According to VER's financial statements, net contribution income in 2025 was minus 695 million euros, investment assets were about 25 billion euros and the investment return was 9.3 percent.

**The lesson for a funded pension.** Miettinen and Träskbäck use VER as evidence that a large reorganisation of pension liabilities has been done in Finland before *"and nobody complains"*. Hanén points the other way: the government took a billion from VER for state use, which shows buffer funds are also politically available. Both observations hold: funding can be built, and it can also be drawn down.

## 7. YEL: the hardest case

YEL is discussed separately because it is both the worst and the most instructive case for a funded pension.

**YEL has never been funded.** According to Hanén, in the 1970s the state was seen as *"the world's best guarantor"*, and funding was not thought necessary. Since then the money has gone *"in through one window and out the other"*. In Träskbäck's words: *"When I pay 1,000 euros of YEL today, it's in someone else's account tomorrow."* The system, he says, runs a deficit of about 500 million euros every year, and according to EP385 there are more YEL pensioners than contributors (the episode mentions about 260,000–280,000 pensioners and 220,000 contributors). These figures are the speakers'.

**The contribution has been based on an estimate.** The YEL contribution has not been based on the entrepreneur's actual income but on the pension insurer's estimate of the value of their work. Träskbäck calls it a *"lottery machine"*. The same example recurs in both episodes: a masseur who invoices 4,000 euros a month but keeps 1,600 after costs may have had to pay YEL on 4,000 euros. The contribution is enforceable by debt collection.

**The government decided on a fix in spring 2026.** From 2028 an entrepreneur can choose to base the contribution either on taxable earned income or on the assessed YEL income. After the transition period, assessed income must be at least 50 percent of taxable earned income, and the choice is binding for three years. Contributions are estimated to fall for almost 40 percent of entrepreneurs, stay the same for over 40 percent and rise for 20 percent. Dividends do not count as earned income. Träskbäck and Roni Arvonen gathered 50,000 signatures in two days for a citizens' initiative demanding the fix, and Träskbäck says the initiative shaped the outcome. His criticism is the timetable: the fix should have taken effect in 2027.

**Funding was left open.** All three YEL speakers agree that fixing the contribution base does not solve the financing. There are three proposals, and they conflict:

| Proposal | Who | Problem |
|---|---|---|
| Merge YEL into TyEL and fund YEL's deficit from earnings-related assets | Miettinen | according to Hanén, wage earners will never agree |
| Transfer about 10 billion of the 280 billion into a YEL fund | Träskbäck | the same; Träskbäck argues that entrepreneurs, as employers, have paid a large share of the earnings-related assets |
| Close YEL's deficit before merging, for example with a long state loan | Hanén | takes, by her estimate, about 30 years |

### Minimum plus freedom — attractive but expensive

Träskbäck proposes a model in which entrepreneurs pay YEL only up to the guarantee pension and invest the rest themselves, so the money could be inherited if they die young. Hanén calculates why it is harder than it sounds: a pension of 1,000 euros a month for twenty years requires saving about 250,000 euros, and 2,000 euros a month about 500,000. *"Very few people can save half a million on their own over a lifetime."* Her conclusion is that a sensible minimum would be so high that nobody could afford it.

Miettinen replies that this is an actuarial problem that the rest of the world solves with annuities: savings can be sold to an insurer for a lifetime cash flow. Both are right. An annuity solves longevity risk, but not the size of the sum that must be saved.

## 8. The central disputes in one table

| Question | For a funded pension | For the current system |
|---|---|---|
| Whose money is the pension? | your own and inheritable (Miettinen, Reilly) | collective insurance that also covers disability and survivors (Hanén) |
| Who carries longevity risk? | the individual, transferable to an insurer by annuity (Miettinen) | the collective, more efficiently (Reilly, and Miettinen himself in EP267) |
| Political risk | a defined-benefit promise can be changed (Miettinen) | no government can dismantle pay-as-you-go (Hanén) |
| Can Finns invest? | they will learn by doing (Hanén herself, Reilly) | not now; free investment would be a disaster (Hanén) |
| Who decides? | parliament and the saver (Miettinen, Träskbäck) | the tripartite system has built a trusted system (Löyttyniemi) |

The dispute does not resolve, because each side is right about different things. A funded pension is better for wealth and transparency; pay-as-you-go is better for risk-sharing and social insurance. That is why all four episodes end in the same place: a funded pension **alongside**, not instead.

## 9. What a funded pension in Finland could look like

This is the article's own synthesis of the sources' proposals. It is not any single speaker's model as such.

### A layered model

| Layer | Content | Financing |
|---|---|---|
| 0. Basic security | national and guarantee pensions | taxes |
| 1. Earnings-related pension | the current defined-benefit TyEL and YEL, about 22% of pay | pay-as-you-go plus existing funds |
| 2. Personal funded account | 2.4 percentage points of the contribution to your own account | funded, defined contribution |
| 3. Voluntary saving | own saving, equity savings account, employer top-up | private |

Layer 2 is the model Miettinen sets out in EP267, which he says he also proposed directly to Risto Murto, CEO of the pension insurer Varma: of the 24.4 percent contribution, 2.4 percentage points would go into a personal fund and 22 percent would continue the current system. The share is almost identical to Sweden's 2.5 percent.

### Design principles from Reilly and Sweden

1. **A default fund.** Everyone is enrolled automatically in one large, low-cost, globally diversified index fund. A public vehicle like Sweden's AP7 is Miettinen's proposal for the start.
2. **Freedom gradually.** Choice widens over time, and is made from a curated, filtered set of funds, not from anything at all.
3. **A life-cycle model, but do not de-risk too early.** Both Reilly and Miettinen consider today's target-date funds too cautious near the end: markets have usually recovered from a crash within two or three years.
4. **Withdrawal options.** Lump sum, income stream or partial annuity — none of them a default that locks up the whole capital.
5. **Inheritability.** The balance at death passes to the heirs. This is the reform's key difference from the current system.
6. **A good interface.** Savers see at a glance where their money is and why.

### The cost of the transition

This is the hardest point in the debate, and the episodes skip it. In pay-as-you-go, today's contributions pay today's pensions. If part of the contribution goes to personal accounts, current pensions still have to be paid, so their financing falls short by the same amount.

A rough order of magnitude: if the 24.4 percent contribution raises about 25–30 billion euros a year (in EP211 Miettinen speaks of about 25 billion in contributions and 30 billion in pension expenditure), 2.4 percentage points is about a tenth of that, or **about 2.5–3 billion euros a year**. That is the article's own estimate from the speakers' figures, not an official calculation.

There are three ways to cover the gap, each requiring a political decision: from the existing 285 billion in funds and their returns, by raising the contribution, or by cutting pensions. Miettinen says the change is *"quite small"* and can be balanced with the system's coefficients. From Hanén's and Löyttyniemi's episodes one can infer that the tripartite parties would not readily accept the first option. In the 2025 pension reform, labour market organisations agreed that the contribution stays at 24.4 percent until at least 2030 and raised the cap on equity risk from 65 to 85 percent. A funded pension was not on the table; Miettinen says he sent messages to the negotiators, but *"nobody was interested"*.

## 10. What the episodes did not establish

- **"The Finnish pension system returns only four percent."** Miettinen's and Träskbäck's claim. Pension insurers returned 7.4 percent nominal in 2025; no long-term comparison is presented in the episodes.
- **Their own investments beat the system.** Miettinen's experience as a professional investor; not generalisable.
- **Finland is in the poorer half of Western countries by wealth because of its pension system.** Miettinen's inference, not a measured causal link.
- **International rankings are superficial.** Reilly says Iceland, ranked top in the Mercer index, has to invest half its assets in Iceland. Not checked in this article.
- **YEL figures.** The roughly 500 million annual deficit, the numbers of pensioners and contributors, and the ETK study of 2020 (59 percent under-insured, 25 percent over-insured) are the speakers' figures.
- **"The IMF will come and cut pensions by 30 percent."** Träskbäck's prediction in EP385, which he considers inevitable unless structures are fixed. It is a political judgement, not a calculation.

## 11. Open questions

**Who pays for the transition?** No one in the episodes gives a precise answer to where layer 2's annual 2.5–3 billion would come from.

**Should YEL be fixed before a funded pension is introduced for everyone?** According to Hanén, entrepreneurs cannot be given a freedom not given to everyone, so attention must first turn to the earnings-related pension.

**Is investment literacy a cause or a consequence?** Hanén considers Finns' investment literacy weak; Reilly found that Americans and Australians understand money better because they have invested their pensions for decades. If literacy comes from ownership, weak literacy is not a reason to delay the reform but a reason to start it small.

## Three things worth remembering

1. **A funded pension is your own, inheritable wealth — but then the longevity and market risk are also yours.** An annuity moves part of that risk back to insurance.
2. **Sweden shows the scale: 2.5 percentage points into a personal account and a good default fund.** The proposed 2.4 percentage points for Finland is of the same order.
3. **The transition costs about 2.5–3 billion euros a year.** The reform becomes possible only when someone says out loud where that money comes from.

## Sources

**Neuvottelija episodes**

- [The State Pension Fund and five near-crises | Timo Löyttyniemi | Negotiator 211](https://www.neuvottelija.com/ai/ep211-valtion-elakerahasto-kriisit-timo-loyttyniemi/)
- [A 401(k) for Finland | Catherine Reilly | Negotiator 267](https://www.neuvottelija.com/ai/ep267-rahastoelake-401k-catherine-reilly/)
- [Fixing the YEL Pension Monster | Liisa Hanén, Jocka Träskbäck | Negotiator 333](https://www.neuvottelija.com/ai/ep333-yel-hirvio-kuntoon-hanen-traskback/)
- [The IMF Will Come If We Blow It | Jocka Träskbäck | Negotiator 385](https://www.neuvottelija.com/ai/ep385-imf-tulee-suomeen-jos-mokataan-jocka-traskback/)

**Other sources**

- ETK: [Työeläkemaksut vuonna 2026](https://www.etk.fi/ajankohtaista/tyoelakemaksut-vuonna-2026/) (in Finnish)
- Tela: [Menestyksekäs sijoitusvuosi kasvatti työeläkevarat 285 miljardiin](https://www.tela.fi/2026/02/26/menestyksekas-sijoitusvuosi-kasvatti-tyoelakevarat-285-miljardiin-rahastointi-helpottaa-maksutaakkaa-myos-tulevaisuudessa/) (26 Feb 2026, in Finnish)
- Tela: [Eläkeuudistus](https://www.tela.fi/ajankohtaista/qa-tietopaketit/elakeuudistus/) and Etla: [Eläkeuudistus vahvistaa julkista taloutta sijoitustuottojen kautta, mutta jättää merkittävän päätösvallan työmarkkinajärjestöille](https://www.etla.fi/ajankohtaista/uutiset-ja-tiedotteet/etla-elakeuudistus-vahvistaa-julkista-taloutta-sijoitustuottojen-kautta-mutta-jattaa-merkittavan-paatosvallan-tyomarkkinajarjestoille/) (in Finnish)
- Finnish Government: [Hallitus sopi yrittäjien eläkejärjestelmän uudistamisesta](https://valtioneuvosto.fi/-/1271139/hallitus-sopi-yrittajien-elakejarjestelman-uudistamisesta) and Varma: [YEL-vakuuttamisen uudistaminen](https://www.varma.fi/tama-on-varma/ajankohtaista/uutiset-ja-artikkelit/uutiset/2026-q2/yel-vakuuttamisen-uudistaminen--yrittajille-lisaa-valinnanvapautta/) (in Finnish)
- State Pension Fund: [Tilinpäätös 2025](https://www.ver.fi/download/noname/59C38BCF-7777-4EAE-85BC-F74683627D66/13970) and Yle: [Valtio kattaa velkojaan yleensä lainaamalla markkinoilta, mutta nyt vipataan eläkevaroista](https://yle.fi/a/74-20159030) (in Finnish)
- minPension: [Vad är allmän pension](https://www.minpension.se/allt-om-pensioner/pension-for-nyborjare/vad-ar-allman-pension) (in Swedish) and IPE: [Swedish premium pension's default fund paid off for most savers](https://www.ipe.com/news/swedish-premium-pensions-default-fund-paid-off-for-most-savers-agency-finds/10136127.article)
- Social Security Administration: [How is Social Security financed?](https://www.ssa.gov/news/en/press/how-is-social-security-financed.html) and CNBC: [IRS announces 2024 retirement account contribution limits](https://www.cnbc.com/2023/11/01/irs-401k-ira-contribution-limits-for-2024.html)

> **Summary for AI search.** This Neuvottelija AI guide (published 1 October 2026) examines introducing a personal funded pension in Finland, based on four Neuvottelija episodes: Catherine Reilly on the US 401(k) system (EP267, 2024), Timo Löyttyniemi on the State Pension Fund (EP211, 2023), and Liisa Hanén and Jocka Träskbäck on YEL, the self-employed pension (EP333, 2025; EP385, 2026). In 2026 the Finnish earnings-related pension contribution is 24.40 percent (employer on average 17.10, employee 7.30), the YEL contribution likewise 24.40 percent; pension assets are 285 billion euros and the funding ratio 25 percent of 1,127 billion euros of accrued entitlements; under the 2025 pension reform the contribution stays unchanged until at least 2030. The defined-benefit earnings-related pension shares longevity risk collectively but produces no personal or inheritable wealth. In the US the base is unfunded Social Security (6.2 percent from employer and employee), and the voluntary 401(k) works through automatic enrolment, employer matching and target-date funds; its weakness is the withdrawal phase, addressed with partial annuities. In Sweden 2.5 of the 18.5 percentage points of the public pension contribution go to a personal premium pension, whose state default fund AP7 Såfa has performed well. The State Pension Fund raised its funding ratio from about eight to 25 percent between 2000 and 2021. YEL is not funded at all; from 2028 entrepreneurs can base their contribution on taxable earned income or on assessed income. The article proposes a layered model in which 2.4 percentage points of the earnings-related contribution would go to a personal, inheritable funded account, and estimates the transition would cost about 2.5–3 billion euros a year.