Social security or welfare in Finland is very comprehensive compared to what almost all other countries provide. In the late 1980s, Finland had one of the world's most advanced welfare systems, which guaranteed decent living conditions to all Finns. Created almost entirely during the first three decades after World War II, the social security system was an outgrowth of the traditional Nordic belief that the state is not inherently hostile to the well-being of its citizens and can intervene benevolently on their behalf. According to some social historians, the basis of this belief was a relatively benign history that had allowed the gradual emergence of a free and independent peasantry in the Nordic countries and had curtailed the dominance of the nobility and the subsequent formation of a powerful right wing. Although Finland's history was harsher than the histories of the other Nordic countries, this did not prevent the country from following their path of social development.

In the last years of the nineteenth century, Finnish social policy had as its goal the lessening of class friction. The few existing pieces of social legislation addressed the needs of specific groups rather than of society as a whole. In the first two decades after the Finnish Civil War in 1918, little was accomplished in welfare legislation except the "Tenant Farmer Act" (torpparilaki, torparlagen), which gave tenant farmers the possibility to buy the land they used and thus get a more secure living. A woefully insufficient national pension plan was set up in 1937, as were measures to aid mothers in need. It was only after World War II that Finnish social policy acquired the characteristics that in the next decades made it similar to other Nordic systems of social welfare.

According to the Finnish sociologist Erik Allardt, the hallmark of the Nordic welfare systems is their comprehensiveness. Unlike the welfare systems of the United States or most West European countries, those of the Nordic countries cover most of the entire population, and they are not limited to those groups unable to care for themselves. Examples of this universality of coverage are national flat-rate pensions available to all once they reach a certain age, regardless of what they paid into the plan, and national health plans based on medical needs rather than financial means. In addition, the citizens of the Nordic countries have the legal right to the benefits provided by their welfare systems, the provisions of which are designed to meet what is perceived as the collective responsibility to ensure everyone a decent standard of living. The Nordic system is also distinguished by the many aspects of people's lives it affects.

The Finnish welfare system differs from those of other Nordic countries mainly in that its benefits are lower in some categories, such as sickness and unemployment payments; otherwise, the Finnish system fits into the Nordic conception of social welfare. Finnish social expenditures constituted about 7 percent of the country's gross domestic product in 1950, roughly equal to what Sweden, Denmark, and Norway were spending. By the mid-1980s, Finland's social expenditures had risen to about 24 percent of GDP, compared with the other countries' respective 35, 30, and 22 percent. Less than 10 percent of these expenditures were paid for by Finnish wage earners; the remainder came roughly equally from the state and from employers. Until the second half of the 1970s, Finnish employers had paid a higher share of social outlays than their counterparts in the other Nordic countries. In response to the slowdown of the world economy after 1973, there was some shifting of social burdens to the state, which improved the competitiveness of Finnish companies abroad.

Finland's welfare system also differed from those of its neighbors in that it was put in place slightly later, and it was only fully developed in the decade after the coalition government in 1966 between the Social Democrat and the agrarian Centre Party. After World War II, the Finns directed their attention to maternal and child care. In 1957 the government established an improved national pension plan and supplemented it in the early 1960s with private pension funds. Unemployment aid was organized in 1959 and in 1960, and it was reformed in 1972. Legislation of the 1950s and the 1960s also mandated the construction of a network of hospitals, the education of more medical personnel, and from 1963 to the early 1970s, the establishment of a health insurance system. The housing allowance system expanded during the 1960s to reach ever-widening circles of the population. Health-care officials turned their focus away from hospital care in the 1970s, and they began to emphasize the use of smaller local clinics. By the 1980s, the Finnish welfare system was up to Nordic standards and had the support of most Finns. All major political parties were committed to maintaining it, and its role in Finnish society seemed secure for the coming decades.

At the end of 2017, the Social Insurance Institution of Finland (KELA) provided refunds of medical expenses to 3,764,362 people and child expense refunds to 1,003,635 people as well as 643,153 pensions, 268,537 disability benefits and 286,630 sickness allowances.

In the late 1980s, the Ministry of Social Affairs and Health directed the welfare system through five departments: social insurance, social welfare, health care, temperance and alcohol policy, and labor. According to Finland's administrative tradition, it is the task of a ministry and its departments to determine policy, which is then administered by central boards. In the case of social policy, there were three central boards for social welfare, health, and labor protection. An exception to this administrative division was the Social Security Institute, which supervised the national pension plan and health insurance for the Eduskunta and the Council of State.

The actual supplier of social care is usually the local government—-the municipality—-supervised by authorities at the provincial level. In the early 1980s, funds from the state made up about 30 percent of the money spent on all social services and pensions, while employers supplied about 40 percent; local governments, 15 percent; and the recipients of services, the remainder.