Abstract WP10-03

Risto Vaittinen and Reijo Vanne. 2010. National Transfer Accounts for Finland in 2004.

This chapter presents the National Transfer Accounts (NTA) divided into public and private transfers and asset reallocations by age for Finland in 2004. The public sector has a substantial role in the intergenerational distribution. About two-thirds of public expenditures can be regarded as age-related spending, which is roughly 30 percent of the GDP. Unlike the case in most countries, in Finland the public sector has positive net financial wealth because of partially funded statutory employment pension insurance. Cohorts stop running lifecycle deficits at the age of 26 and accrue a surplus until the age of 59. The average ages of consumption and labor income are 42.2 and 43.0 years, respectively. There are considerable differences in the patterns of private and public reallocations. Public savings exceed asset income and have an overall negative effect on financing the lifecycle deficit, whereas private reallocation is in surplus for almost every age group. Public-sector transfers turn from deficit to surplus at age 24. While private reallocation finances 40 percent of the lifecycle deficit of younger cohorts, public transfers finance almost all of it for retired cohorts.

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