Pension insurance is the only mandatory insurance for an entrepreneur and one of many for the employers/employees. See more below.
Types of pension insurance in Finland:
- YEL – entrepreneur’s pension insurance
- TyEL – employee’s pension insurance
When do you need to take the pension insurance?
- YEL is required if
- your main occupation is your entrepreneurship,
- you’re between the ages of 18-67,
- your entrepreneurship activities continue for at least four months and
- you make at least 7958,99 (in 2020) from those activities (YEL income),
- additional requirements for entrepreneurs in limited companies:
- you own more than 30% or with family members more than 50% of the shares/voting power of the company and
- you are in a member of the top management of the company (CEO or member of the board).
If you fulfill the requirements above, you need to take the YEL insurance within six months of starting your entrepreneurship. If some of the requirements above are not fulfilled, then it is likely that you require TyEL pension insurance.
- TyEL is required if
- someone works for your business under an employment contract,
- the employee is between the ages of 17-68 and
- the employee’s pay is at least 60,57€ per month (2020)
How much does the pension insurance cost?
- YEL is
- 24,1% (in 2019 and 2020) of the chosen amount of entrepreneurship income, for those between ages 18-52 years old
- 25,6% (in 2019 and 2020) of the chosen amount of entrepreneurship income, for those between ages 53-62 years old
- 24,1% (in 2019 and 2020) of the chosen amount of entrepreneurship income, for those over 63 years old
- A discount of 22% is applied to new entrepreneurs for the period of first 48 months
- TyEL is 25,3% (in 2020) of the employee’s gross salary, of which
- 7,15% is withdrawn from the employee’s salary (in 2020 for employees between the ages 17-52 years old)
- 8,65% is withdrawn from the employee’s salary (in 2020 for employees between the ages 53-62 years old)
- 7,15% is withdrawn from the employee’s salary (in 2020 for employees above the age of 63)
- 18,15%/16,65% is the employer’s contribution (in 2020)
- Client-based discounts may apply.
What else the pension insurance affect for an entrepreneur?
Please notice that the amount of income, which is the basis for YEL calculation (YEL income) is an estimate and does not have to equal the actual income earned. Still, deciding the amount of YEL income is very important as it affects the amounts of social benefits available to the entrepreneur. The amount of YEL income affects for example the access to and amounts of sickness allowance, parental allowance and unemployment allowance, not to mention future pension payments. According to a change of legislation, the YEL income also affects from 01.01.2016 the allowances paid based on voluntary insurances of entrepreneurs taken to cover accidents at work.
Pension insurance companies in Finland with links to their English language websites:
We help our clients to manage their risks in a smarter way and relieve them of some of the bureaucratic responsibilities of being an entrepreneur and/or an employer. Feel free to contact us so that we can identify how we can help you run your business more effectively and efficiently.
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