FINLAND - Reduction of the Employer’s Social Security Charge - 18 May 2009

Global Employer Services

    Reduction of the
Employer’s Social Security Charge

Background

This is an update to our
Global Rewards Update in March 2009. The bill to reduce the employer’s
social security charge had been passed by the Finnish government on March 11,
2009. The reduction will be carried out in two stages. The contribution is
lowered by 0.801% as of April 1, 2009 and will be reduced to 2% as of January
1, 2010. The reduction of contribution to 2% will be legislated at a later
stage.

Current Situation

The prior applicable rate
of the employer’s social security contribution was 2.801%, 5.001% or
5.901%. The social security contribution consists of national pension
contribution and health insurance contribution. The new legislation will
abolish the national pension contribution entirely.

Elimination of the Employer’s National Pension
Contribution

The reduction of the
employer’s social security charge is intended to be permanent. The
national pension contribution is lowered by 0.801% as of April 1, 2009 for
all employers. The applicable rate therefore becomes 2%, 4.2% or 5.1% of
gross salaries.

In the next stage as of
January 1, 2010, the national pension contribution would be abolished
completely and as a result the employer’s social security charge would
be 2% for all employers.

Action

     Companies should:

·         
Take the cost saving impact
of the social tax reduction into consideration before implementing equity
plans for optimal arrangement.

People to Contact

For assistance in this
matter or any other issue related to the operation of your global rewards
plans, please contact your local Deloitte global rewards consulting services
advisor or email us at: globalequity@deloitte.com and a global rewards consultant will contact you.

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