Financing

In addition to national pension, guarantee pension and survivors’ pensions, other benefits paid out of the National Pension Insurance Fund are the child increase for pensioners, disability benefits, housing allowance for pensioners and front-veterans’ benefits. Work capacity assessment costs are also paid out of the National Pension Insurance Fund.

National pension insurance expenditure is fully funded by the state, but the return on assets brings the state’s payments to the National Pension Insurance Fund down to slightly under 100% of the total costs. Maintaining liquidity across the year requires the National Pension Insurance Fund to be at or above a specified minimum level. Since 2010, the current assets of the National Pension Insurance Fund, after deduction for borrowed capital, has at the end of the calendar year been 3.5% of the total annual amount of national pension expenditure and administrative costs.

The funding of national health insurance is divided between earned income insurance and medical care insurance.

Earned income insurance

Earned income insurance comprises sickness allowances, daily allowances for parents and rehabilitation allowances, as well as family leave compensations paid to employers, compensations for the provision of occupational health services, and compensations for the annual leave costs of employees on daily allowances for parents.

Earned income insurance is mainly funded by employers (employers’ contribution to national health insurance) and by wage and salary earners and self-employed persons (contribution to daily allowances). The state funds that part of the costs of minimum-rate daily allowances and rehabilitation allowances which exceeds the allowance calculated on the basis of annual income. The state also funds part of the occupational healthcare of self-employed persons and farmers.

The funding of earned income insurance changed at the beginning of 2025. At the time, 68% of the expenditure (not including compensations for family leaves, the additional contribution from self-employed persons and the state contribution) was funded with the national health insurance contribution levied on employers, while 32% was funded with the contribution towards daily allowances. As of 2025, the state no longer provides funding for the share of sickness allowance, daily allowances for parents or rehabilitation allowance that is otherwise covered through insurance contributions (previously known as basic central government transfers). The national health insurance contribution (excluding family leave compensations) and the contribution towards daily allowances are adjusted by the same amount each year to cover funding needs.

Medical care insurance

Medical care insurance comprises the reimbursements that Kela provides for medicine costs, doctors’ and dentists’ fees, examination and treatment costs and travel costs as well as the expenditure on rehabilitation with the exception of rehabilitation allowances, the compensations for medical care expenses provided under the employment accident insurance scheme for agricultural entrepreneurs (basic coverage) and EU reimbursements for medical care expenses.

Benefit expenditures and administrative costs under the medical care insurance are funded by the state and the insured. As of 2025, the funding of medical care insurance changed so that the state covers 51.4% of the funding of benefits and operating costs (as well as a share of reimbursements for medical care benefits received abroad that are paid to other EU countries) and the insured 48.6%.

A contribution towards medical care insurance is payable by all insured persons (i.e., employees, self-employed persons and pension recipients and other beneficiaries) based on their taxable earnings subject to local government tax. The contribution percentages are determined annually, with the basic rule being that the beneficiaries’ contribution must be 0.39 percentage points higher than that of wage and salary earners and the self-employed.

The current assets of the national health insurance, after deduction for borrowed capital and funds set aside, must be 8–12% of the total annual expenditure on health insurance. The criteria for the contributions payable by employers and the insured population, as well as the state’s share of funding for the medical care insurance, are determined so as to fulfil this condition.

Among the benefits paid out from the Fund, the state provides funding for student benefits, maternity grants, adoption grants, conscript’s allowances, the rehabilitation-related travel costs of front veterans, and the urgent social welfare assistance provided to undocumented persons.

The state is the main source of funding for child benefits, general housing allowances, interpreter services for persons with disabilities and child maintenance allowances, with the exception that in the Åland Islands, these benefits are funded by the Åland Islands Government.

Advances on basic social assistance are fully paid to Kela by the state, but the municipalities’ shares are taken into account through the system of central government transfers to municipalities. Kela-paid unemployment benefits are funded by the state, the municipalities and the Employment Fund. The Employment Fund contributes to the funding of basic unemployment allowances an amount equal on average to the amount of payments made to employees who are not members of an unemployment fund. The Employment Fund also pays for all of the expenditure on transition security allowances.

Child care allowances are funded by municipalities, with the exception of allowances paid abroad, which are financed by the state. Student health services are funded with the student healthcare fee (23%) and a state contribution (77%).