An independent working group established to review remuneration and pensions at Finnish state-owned companies has recommended that all existing schemes should be replaced with defined contribution (DC) pensions.

The working group, chaired by Markku Pohjola, an economist, was established in April after the government admitted that despite guidelines to prevent excessive remuneration, levels were "excessively high" for state bodies.

It was decided that an independent party should examine the current situation, and the working group was given the remit of evaluating existing guidelines, including pension arrangements, and making recommendations for reform. (See earlier IPE article: Finland reviews pensions at state firms)

In its report, presented to Minister Jyri Häkämies yesterday, the group suggested the existing guidelines are "largely consistent with current market practice and [have] proved itself" but suggested a few points should be reconsidered such as rewarding senior management for long-term performance.

On the issue of pensions - which are currently included in contracts of management as state-owned companies do not have their own pension system or benefits - the working group recommended that the retirement age specified in new executive contracts should be 63.

In addition, it added that in relation to supplementary pension plans, if any are required, "all existing schemes will be replaced by DC pensions", and any supplementary pensions will be disclosed as part of the total remuneration package to allow the market to "evaluate the remuneration of the management objectively".

Elsewhere, research from the Local Government Pensions Institution (Keva) has revealed more municipal workers are postponing their retirement, with the average employee now working 10 months longer.

Figures from the research showed that 26% have postponed retirement, compared to 8% in 2005, following the introduction of flexible retirement allowing workers to retire between 63 and 68 years of age.

The research that suggested those likely to retire the latest are teachers and lecturers, at an average age of 63.9 years, closely followed by Doctors at 63.8 years, although nurses tend to retire earlier than the average at around 61.2 years.

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