Government proposal: change security for the elderly – unemployment path to retirement to be abolished
The Government has made progress in its plans to abolish the right to additional days of unemployment allowance or the so-called “unemployment path to retirement”, but a new change security model will be proposed for persons aged 55 or over starting on 1 January 2023. This includes, for example, a change security allowance paid by the unemployment fund or Kela. The Parliament has not yet approved the Government’s proposal.
The right to additional days of unemployment allowance, also known as the unemployment path to retirement, refers to the right to earnings-related allowance even though the maximum period for earnings-related allowance (300–500 days) has been reached. It is possible to receive additional days for earnings-related allowance depending on the year of birth and age. In addition, a person must have been employed in a job that accrues pension for at least five years during the last 20 years.
Gradual changes by age group
The abolition of the right to additional days of unemployment shall not affect those who have already acquired the right to the additional days. In addition, the change does not apply to those who will transfer into the unemployment path to retirement before 2023. Those born in 1962 are the last age group to be able to implement the current form of right to additional days of unemployment.
The gradual changes therefore apply to those born in 1963 and after from 2023 onwards. The minimum age for the right to additional days of unemployment will rise to 63 years for those born in 1963, to 64 years for those born in 1964, and those born in 1965 will be the first age group not entitled to additional days of unemployment at all.
The payment for additional days of unemployment would end by 2030.
Change security as counterbalance
As a counterbalance to the abolition of the unemployment path to retirement, the Government proposes a new change security model that would give those covered by it the right to:
- a change security allowance equivalent to one month’s wages
- training lasting up to six months, the value of which would be equivalent to a maximum of two months’ wages
- time off for re-employment that is five days longer than usual.
To be covered by the change security, the person must:
- have been dismissed on financial and production-related grounds (termination of fixed-term employment does not meet the condition)
- have reached the age of 55 by the time of termination
- have been employed by the same employer for at least five years by the time of dismissal
- have registered as a job seeker at the TE Office within 60 days of termination.
The new change security model would be introduced as of 1 January 2023, which means that the model would apply to those whose employment contracts have been terminated on financial and production-related grounds on or after 1 January 2023.
Change security allowance to be applied for from an unemployment fund or Kela
The change security allowance is paid by the unemployment fund if the person is a member of the unemployment fund. The change security allowance can be paid even if the person has not fulfilled the 26-week membership or work requirement of the unemployment fund. However, membership of an unemployment fund does not affect the amount of the change security allowance; instead, the amount of the allowance is the same for everyone. Kela may also be the payer of the change security allowance.
The change security allowance has no effect on the amount of earnings-related allowance, i.e. it can be paid in addition to earnings-related allowance, but on the other hand, it also does not require unemployment. A change security allowance equivalent to one month’s wages can be paid even if the person immediately starts a new employment relationship.
Change security training is organized by the TE Office or the Centre for Economic Development, Transport and the Environment. Participation in change security training is voluntary, and refusal to participate will not result in the loss of earnings-related allowance.