Self-employed persons’ pension insurance (YEL)
What is YEL insurance and do I need it? In this section, we explain the YEL insurance criteria, size of your contributions and other practical matters.
Self-employed persons’ pension insurance is known in Finland as YEL insurance. YEL is statutory for all entrepreneurs if they fulfil certain criteria. There is no fixed amount for YEL contributions and the amount of entrepreneur’s pension: this depends on the entrepreneur’s annual YEL income.
As its name suggests, YEL self-employed person’s pension insurance provides a pension for entrepreneurs after they retire. However, it is also important to the pre-pension years: YEL income is also used to calculate compensation paid from voluntary workers' compensation insurance and daily allowance under health insurance.
YEL income also affects the amount of unemployment benefit paid and an entrepreneur’s income during parental leave. In other words, an entrepreneur’s daily allowance during maternity, paternity and parental leave depends on YEL insurance.
So YEL is both a statutory and important type of insurance — read more in this guide about taking out additional insurance!
When do I need to take out YEL insurance?
YEL insurance is statutory if you fulfil certain criteria. Take out YEL insurance if all the following are true:
- You are aged between 18–67.
- You have been working as an entrepreneur for at least four consecutive months.
- Your income will be at least 9 010,28 € in 2024 (read more about income below!)
- You work for a company you own.
- You do work which is not subject to some other statutory insurance.
An OP Light Entrepreneur must also take out self-employed person’s pension insurance if they fulfil the above criteria. See our article on YEL-insurance for further information on self-employed persons’ pension insurance.
The insurance is also statutory for foreign entrepreneurs operating in Finland.
Taking out YEL self-employed persons’ pension insurance
As an entrepreneur, you must arrange YEL insurance for yourself. You can take it out with any pension insurance company or pension fund. Under Finnish law, you cannot take out a voluntary insurance policy instead of YEL pension insurance.
Where can I take out YEL insurance?
Log into our service and go to "Additional services" -> "Insurance".
In this case, the YEL insurance is issued by Ilmarinen Mutual Pension Insurance Company.
You will receive a reminder from the Finnish Centre for Pensions if you do not take out YEL insurance. As a last resort, the Centre will take out YEL insurance on your behalf, from a pension insurance company of its choice.
If an entrepreneur is late in taking out YEL insurance, they can still take out cover for the previous three years at a maximum.
YEL or TyEL pension insurance?
Entrepreneurs are covered by YEL and employees by TyEL pension insurance.
If a family member of an entrepreneur works for the entrepreneur’s company, the family member’s pension type (YEL or TyEL) depends on the type of company and the family member’s work.
What is YEL income?
The slightly odd-sounding YEL income determines the amount of YEL pension insurance, accrued pension and various social security benefits.
YEL income
- is a financial valuation of the work input by an entrepreneur
- is set to be equivalent to at least the salary that would be paid to a person with equivalent skills to yours, if that person were doing your job as an employee.
Although a higher YEL income means higher pension insurance contributions, it is important to estimate your YEL income correctly from the start. As we’ve already mentioned, YEL income has a direct impact on the size of your pension, pension contributions, health insurance daily allowance, and amounts paid out of workers' compensation insurance.
It also affects unemployment benefit and parental leave allowance.
Please note that the aforementioned matters do not depend on your confirmed taxable income — they depend on your self-assessed YEL income.
How is YEL income defined?
YEL income is individually assessed. If necessary, you can adjust the assessment to take account of your situation.
The key issue is that it is roughly equivalent to what an entrepreneur would pay someone else to do the same work. It is closely tied to the work input and its type.
You will confirm your YEL income at the same time and with the same pension insurance company that you use for YEL insurance. The amount of YEL income is annually reviewed based on a wage coefficient set by the Ministry of Social Affairs and Health. The idea is to tie YEL income to general wage and price trends.
See the ETK Eläketurvakeskuksen työtulo-opas (Finnish Centre for Pensions’ Guide on YEL Income, in Finnish).
YEL income limits for 2024
So YEL income is based on a valuation of your work. However, there is also an upper and lower limit to this, both of which change each year.
The lower limit for YEL income in 2024 is 9 010,28 € a year. Unemployment security lower limit is 14 803 € a year.
The YEL income upper limit for 2024 is 204 625 €. You cannot set an income from work for yourself that is larger than this.
Self-employed persons’ pension and YEL calculator
The self-employed persons’ pension is based on YEL income and is around 1.5% per year. Your entrepreneur’s pension level will be based on the total income you earn during your career as an entrepreneur.
EXAMPLE
If your income is 24 000 € a year, your monthly pension will be 30 € for each year worked. So if you work as an entrepreneur for 15 years, you will accumulate self-employed persons’ pension of 450 € a month.
Pension insurance companies provide online YEL calculators which you can use to check how your YEL income will affect your pension level and the pension contributions you must pay.
YEL daily allowance
Entrepreneurs with YEL pension insurance are entitled to YEL daily allowance. You can apply for this if you fall ill.
YEL daily allowance is intended to cover the qualifying period for sickness allowance. The qualifying period for YEL sickness allowance is 1+3 weekdays and that of sickness allowance itself is 1+9 weekdays.
The amount of YEL daily allowance is based on your YEL income. Sickness allowance also takes account of the entrepreneur’s other income, such as salary/wages.
YEL contribution and its size
Your YEL contribution is based on your YEL income and a certain percentage of it. This is different for entrepreneurs of different ages.
A first-time entrepreneur is entitled to a reduction of 22% per cent on the YEL contribution for the first 48 months in business.
| YOUR AGE | YEL CONTRIBUTION, % OF INCOME FOR 2023 AND 2024 | NEW ENTREPRENEUR, YEL CONTRIBUTION AS % OF INCOME |
| Below 53 | 24,1 % | 18,798 % |
| 53-62 | 25,6 % | 19,968 % |
| 63 or older | 24,1 % | 18,798 % |
EXAMPLE
As a new, 30 year-old entrepreneur, you have set your YEL income at 20 000 € per year. In such a case, your pension contribution will be at the reduced percentage.
So your YEL contribution will be around 3 760 € per year. Your pension contributions will also be affected by the number of contributions — use your pension insurance company’s calculator to check this!
Tax deduction of YEL contributions
All YEL contributions are fully tax-deductible. If you are married, tax deductions for your YEL contributions can also be filed on your spouse’s tax returns.
You should tax-deduct the contributions on the tax return of the spouse paying most tax on salary and other earnings subject to progressive taxation.
Adjusting the YEL contribution
Entrepreneurs’ pension insurance contributions are flexible. An entrepreneur can choose to pay either higher or lower pension insurance contributions. They can also improve their pension cover by raising their contributions by 10% to 100%.
This does not involve a permanently raised YEL income. However, please note that a lower contribution will affect any benefits tied to pension insurance, such as unemployment benefits and parental allowance.
Please bear in mind that the higher your YEL pension insurance contributions are, the more pension you will accumulate.
Where can I obtain a YEL certificate?
You may need a YEL certificate for Kela, taxation or certain customers.
When selling your services, you may need to prove that you have taken out YEL insurance and made your pension contributions on time. You should provide a YEL certificate for Kela if you are applying for maternal or sickness allowance, or other social benefits.
The easiest way to obtain a YEL certificate is online, from your pension insurance company, or by contacting customer service.
What other insurance do I need?
You may need other insurance in addition to YEL insurance. To find out about other insurance, we recommend that you read the What insurance does an entrepreneur need guide.
What can we do to help?
Because your pension and social security depend on statutory YEL insurance, make sure that you arrange YEL on a sustainable basis from the start. So take account of YEL contributions when planning your business and finances.
As an OP Light Entrepreneur, you will also receive advice from us on the ‘YEL basics’. If you have more detailed questions, your pension insurance company is probably the best source of advice.
If you need help, our expert customer service is available via chat on our website. OP Light Entrepreneurs can also phone us on our helpline — log into the service to find our contact information.