All practical evaluations of fiscal sustainability that include the effects of population ageing must utilize demographic forecasts. It is well known that such forecasts are uncertain, and that has been taken into account in some studies by using stochastic population projections jointly with...

This study analyses financial sustainability of the Finnish public sector. Current tax rates are unlikely to yield sufficient tax revenue for financing public expenditure under an ageing population. In the base alternative we assume that the European crisis does not worsen and that productivity...

Municipal employees and private-sector employees in Finland belong to separate earnings-related pension systems. Both systems are financed by contributions from the payroll, and are mostly pay-as-you-go. Thus if a municipality decides to buy services from the private sector, instead of producing...

Elderly people could markedly increase they standard of living by releasing their housing equity. Purchase of a single-payment life annuity would increase the benefits of this release. The tax treatment of these annuities is, however, very strict in Finland, because both yield and capital are...

This study analyses the adjustment of the Finnish earnings-related pension system to very low economic growth. The results show that a permanently lower growth rate of the wage bill would raise only moderately the pension contribution rates in the long term. This is because also the benefits are...

This study simulates with two dynamic models the macroeconomic and public finance outcomes of a reduction in the corporate income tax rate in Finland. FOG-model is a dynamic CGE model, which is calibrated to the Finnish economy. NiGEM is a multi-country macroeconometric model. The results show...

In this report, we analyze the Finnish R&D tax incentive scheme of the years 2013 and 2014. Under the scheme, firms were eligible for double corporate tax deduction incentive on labor expenses incurred for undertaking R&D activities. Our report consists of a literature review, an empirical...

This study analyzes the sustainability implications of demographic and investment risks in the Finnish private sector pension system (TyEL). The results show that current contribution rate is likely to be too low to finance the future higher expenditure. The main sustainability problem is not,...

We study the extent to which retired households in Finland could supplement their mandatory pension benefits by releasing their equity. We also consider the tax treatment of different financial products that turn wealth into an income stream. In addition, we use a life cycle consumption-savings...

Pension prefunding can be used to smoothe contribution rates in economies where ageing will increase pension expenditure. But how extensive should prefunding be, in a defined benefit pension system, when there is considerable uncertainty concerning future mortality, fertility, and migration? We...