National income register would serve the whole society

A national income register would bring a wide range of benefits to the society – authorities, employees, employers, and the financial sector alike. The new system is designed to transmit information automatically, removing the need for employers to make annual and monthly employee-specific reports to pension and non-life insurance companies.

The income register, developed by the Finnish Ministry of Finance, would include a service through which those authorised to the information could do so automatically. This would give them real-time access to the wages and salaries, benefits, and other income details of individual citizens.

Employers are currently obliged to report all paid salaries separately to the Finnish Tax Administration, to authorised pension companies, as well as to insurance companies. The processing and governance of the information is not centralised, but instead dispersed into separate systems.

“The reform will benefit employers and the insurance sector equally. The data will be transmitted automatically into a single location, without the need to request it, and will be available to all who need it”, says Timo Tuominen, Head of Insurance Digitalisation at the Federation of Finnish Financial Services.

“The register could also benefit banks if they were authorised to check the income information of a customer applying for a loan, naturally with the customer’s permission”, Tuominen adds. The national income register would also contribute to the prevention of shadow economy.

Legislative changes would support implementation

The implementation of a national income register could proceed more fluently if social insurance laws were amended. The sizes of income-based benefits, such as earnings-related unemployment allowance or the daily allowance contribution of health insurance, are determined from periods of different length. Some apply the income of the previous pay period, some the income of the days preceding the occurrence of the insured event. Such varying data is not easy to draw out from the income register.

“The easiest way would be to harmonise social insurance legislation so that insurance compensations were determined based on a specific time period in the register”, Tuominen concludes. “The quality and volume of information employers are required to enter in the register should be such that the register is genuinely useful and can reduce the burden of reporting.”

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Infrastructure and Security

Timo Tuominen

Head of Insurance Digitalisation