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History
Kela, the Social Insurance Institution of Finland, was founded on 16 December 1937. For the first few decades of its history, Kela was, as its Finnish name (“National Pensions Institute”) implies, a pension provider whose sole responsibility was to pay out national pensions. Since then, Kela’s operations have expanded considerably.
Social protection in all stages of life
From a pension insurance institution, Kela has evolved into a guarantor of social protection for all. Today, Kela offers social security in all stages of life.
The Finnish social security system has been built up over the decades, and the number of benefits that Kela provides has grown from one to several dozen.
Milestones in Kela’s history
The 1930s
The first National Pensions Act was approved. Kela started operations on 16 December 1937.
The National Pensions Act became effective in 1939. The National Pensions Scheme was originally a retirement savings scheme. The national pension contributions were paid into personal accounts with Kela. The contributions and the interest on them accrued pension rights.
The 1940s
The first disability pensions were granted in 1942.
Kela began to award old-age pensions in 1949.
The 1950s
Following the national pensions reform in 1956 the pension became an income-tested flat-rate benefit, the personal accounts were abolished and the pension contributions were collected in a corresponding manner to taxes.
The 1960s
Citizens were issued with a personal social security code and a health insurance card in 1963. A certificate from the civil registry (as proof of identity) was no longer required to accompany applications for a pension.
Health insurance benefits became available from Kela in 1964. Before that, Kela’s customers had consisted of persons incapable of work and pensioners. Now all persons resident in Finland were Kela’s customers. At the same time, new approaches were introduced to rehabilitation and disease prevention and a basis was created for early rehabilitation. Finland was also divided into 204 health insurance districts. Each district encompassed one or several municipalities.
The second stage of the National Health Insurance was introduced in 1967, extending coverage to doctors’ fees. The waiting period for the sickness allowance was cut from 14 to 7 days.
The first survivors' pensions, child care allowances and pensioners’ housing allowances were granted in 1969.
The 1970s
Direct reimbursement for medicine purchases was introduced in the pharmacies in 1970.
An organizational reform in 1975 merged the hitherto separate field organizations for pension insurance and health insurance into a unified regional and local administration. The reform was aimed at improving customer service, speeding up decision-making and strengthening civic participation. At the same time a legislative reform was introduced through which it became possible for the central administration to delegate decisions in pension cases to the local offices.
The 1980s
The 1980 reform turned the national pension into a non-means tested minimum pension available to all residents of Finland.
The daily allowance and maternity allowance schemes (National Health Insurance) were reformed in 1982.
Payment of care and rehabilitation assistance for severely ill children started in 1983.
In a 1985 reform of unemployment protection, the provision of basic unemployment benefits was entrusted to Kela.
Payment of disability allowances started in 1989.
The 1990s
Child benefits and child home care allowance became available from Kela in 1993.
The maternity grant, financial aid for students, conscript’s allowance, general housing allowance and labour market subsidy became available from Kela in 1994.
At the beginning of 1996 the national pension scheme was changed so that the national pension became a minimum pension dependent on other pension income. The national pension contributions were abolished. The burial grant was discontinued.
The system for school transport subsidy has been administered by the Social Insurance Institution since 1997.
The 2000s
A new act on the Social Insurance Institution was promulgated in 2001. Following this, an external Board of Directors for Kela was constituted in 2002. The euro was introduced in that same year, requiring considerable changes especially to the benefit systems.
The adoption of electronic document management transformed internal operations in 2000-2004. Decisions on claims for benefit were from this time on made electronically throughout Finland. This made it possible to shift workloads between areas with heavier and lighter workloads.
Finland introduced the European Health Insurance Card (EHIC) in June 2004.
In 2006 the financing of health insurance was changed so that it was divided into earned income insurance and medical care insurance.
A partial sickness allowance was introduced in 2007.
The National Pensions Act was reformed in 2008 to cover also the survivors’ pensions provided by Kela. Coinciding with this, two new acts governing disability benefits and housing allowances for pensioners were enacted.
In April 2009 reference pricing for medicines was introduced.
During 2009, the telephone customer service became nationwide.
In March 2011 the new guarantee pension was introduced, which increased the minimum pension level of persons who are resident in Finland. At the same time, the special assistance for immigrants, which had been paid from October 2003, was abolished.
Responsibility for the administration of the basic social assistance scheme was transferred to Kela at the beginning of 2017.
In August 2017 most students became covered by the general housing allowance scheme.
The two-year basic income experiment ended on 31 December 2018
Since the beginning of 2021, all higher education students have been required to pay a healthcare fee to Kela.
A family leave reform came into effect on 1 August 2022.
In 2023, due to higher electricity prices, clients could apply for assistance with electricity costs.
