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 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 first disability pensions were granted in 1942.
Kela began to award old-age pensions in 1949.
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.
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.
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 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.
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.
A new act on the Social Insurance Institution was passed in 2001. Following this, an external Board of Directors for Kela was constituted in 2002. In 2002 the euro was introduced, and this required 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, Kela began consolidating telephone customer service into a new national Customer Contact Centre. In 2009 the telephone customer service became nationwide.
The development of Kela’s e-service started. The aim is that the customers can handle the most common matters that require contact with Kela online, if the customer so chooses.
In March 2003 the possibility of changing a medicine to a cheaper one at the pharmacy was introduced as regards reimbursements for medicine costs.
In 2006 the financing of health insurance was changed so that it was divided into earned income insurance and medical care insurance. The system for reimbursements for medicine costs was reformed the same year.
In 2007 the partial sickness allowance was introduced. The paternity leave was introduced in the same year. The amounts of the parental allowances for persons in employment were increased. The system of direct reimbursement without authorisation was extended to service producers in health care.
In 2008 the National Pensions Act was reformed. The survivors’ pensions available from Kela were now integrated into the Act. At the same time the separate Act on Disability Benefits and the Act on Housing Allowance for Pensioners took effect.
In April 2009 reference pricing for medicines was introduced. The administration of the child maintenance allowance scheme was transferred from the municipalities to Kela.
In 2010 preparations started for the introduction of process management and a reform of the benefit data systems and online services (so-called ARKKI project). The online services were developed. The number of authenticated online transactions grew to 6.5 million from 4.8 million in the previous year.
At the beginning of 2010 the national pension contribution for employers was abolished.
The project for direct reimbursement for taxi travels started in May 2010.
In September 2010 the administration of interpreter services for the disabled was transferred from the municipalities to Kela.
Through decisions of the Kela Board insurance districts have been consolidated into larger units and local offices have, after proper consideration, been replaced by citizen service centres. Customer services are to an increasing extent concentrated to the Internet and call centres.
In March 2011 the new guarantee pension was introduced, which increases 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.
The basic social assistance has been provided by Kela since the beginning of 2017.
Kela implements the experiment testing a basic income from 1 January 2017 to 31 December 2018.
In August 2017 most students became covered by the general housing allowance scheme.