The Case of the Guarantee Pension Reform: Change of Perceived Income Adequacy among Low-Income Pensioners in Finland

Abstract

This article investigates the effects of the Finnish 2011 guarantee pension reform on perceived income adequacy among the financially most disadvantaged pensioners in Finland. These particular pensioners receive the Finnish minimum pension, which is the full amount of the national pension. The guarantee pension was designed to be an individual supplementary allowance that would not affect the principles of the earnings-related pension and the national pension schemes. The main research question is as follows: How has the perceived income adequacy of pensioners entitled to the full national pension changed as a result of the guarantee pension reform? The analysis is based on pre- and post-reform (2010 and 2013) postal surveys, which were targeted at pensioners aged 65–85 years who were already entitled to the full national pension and who became entitled to the guarantee pension in 2011. The analysis illustrates that low-income pensioners were more financially satisfied after the reform than before it. Thus, it can be argued that the guarantee pension reform has had a positive effect on the perceived income adequacy of low-income pensioners. However, health, demographic and socio-economic factors also play a role when perceived income adequacy is examined among the low-income elderly population.