Self-employed persons’ statutory pension insurance YELSelf-employed persons’ employment pension insurance YEL covers entrepreneur’s pension and social security.
YEL insurance is mandatory for most entrepreneurs
YEL insurance is mandatory for most entrepreneurs and cannot be substituted by voluntary insurance policies. You should take out pension insurance in accordance with the Self-Employed Persons’ Pensions Act immediately when starting your business. We recommend that you take out YEL insurance within six months from the start of the business at the latest.
YEL insurance accrues your old-age pension. Self-employed persons’ pension insurance also gives you cover if you lose your ability to work, fall ill or go on parental leave. Your family members are entitled to a survivors' pension if you perish. The amount of the pension is determined on the basis of YEL income.
According to the Finnish Centre for Pensions, there are approximately 200,000 YEL-insured entrepreneurs in Finland. Persons running a light-entrepreneurship business also need self-employed persons’ pension insurance. Part-time entrepreneurs must take out YEL insurance if the other conditions for insurance are met.
You must take out YEL insurance if:
- You are resident in Finland.
- You work in your company.
- You have been an entrepreneur continuously for at least four months.
- Your annual income is at least EUR 8 575,45 euroa (in 2023).
- You are aged between 18–68. The upper ager limit for insurance increases gradually.
Managers of limited companies who hold more than 30% of the share capital or votes alone or more than 50% of the share capital or votes together with members of their family are also insured under YEL insurance. When shares are jointly owned by the shareholder and their family, the shareholder must own at least one share personally. Partners in general partnerships and general partners in limited partnerships are also insured under YEL insurance.
For private traders, YEL insurance is provided for the self-employed person. Often family members also work in the company. They are insured under YEL or TyEL.
Watch what you can get with an entrepreneur's YEL insurance in the video (in Finnish).
Self-employed persons’ pension insurance YEL is the basis of the entrepreneur’s pension and social security
When you take out YEL pension insurance, your pension insurance company will give you a personal recommendation on your YEL income amount and leeway for it to change on a yearly basis. The leeway allows you to change your YEL income by at most 30 per cent higher or lower than the recommendation. Assess the value of your work input and use the application to provide additional information on your situation, if necessary. Your pension insurance company will approve a YEL income corresponding to your work input on the basis of the overall assessment.
The pension accrued from your entrepreneurship as well as your YEL contributions will be calculated as based on your income. Daily allowances paid by Kela, such as sickness and parental allowance, are also calculated as based on your confirmed income. YEL income also determines the amount of your unemployment benefit. If you are a member of a self-employed persons’ unemployment fund, you may be eligible for daily allowance based on your YEL income. The entrepreneur’s wellbeing and work ability are essential to the company’s success.
YEL income will determine your pension, social security and YEL contribution – try the YEL calculator
YEL insurance is a statutory, which means that the YEL contribution is the same in all pension insurance companies. The contribution is a fixed percentage of your YEL income. The Ministry of Social Affairs and Health confirms the percentage of the contribution annually.
The amount of your YEL contribution is affected by four factors: your confirmed YEL income, the contribution percentage, the due months and whether you’re a first-time entrepreneur.
YEL contributions are entirely tax-deductible. You can deduct the contributions in your own taxation, your spouse’s taxation or the company’s taxation. Follow the tax authorities’ guidelines when filling out your tax return.
You can calculate your YEL contribution with Ilmarinen’s YEL calculator.
What is the minimum YEL income?
YEL income refers to the monetary value of your work input. Factors related to the extent and type of your entrepreneur work, such as your working hours, your company’s net sales and the possible seasonality of your business are taken into consideration when determining your YEL income. All work you perform as an entrepreneur counts towards the same YEL income – in other words, you only need to take out one YEL insurance policy. When you take out YEL pension insurance, our partner, Ilmarinen, will recommend a suitable income in euros.
The amendment to the YEL act entered into force on 1 January 2023. The YEL reform amplifies the information needed in order to estimate the YEL income. The terms minimum YEL income and maximum YEL income refer to the limits the Ministry of Social Affairs and Health annually confirms based on the wage coefficient. In 2023, the minimum YEL income is 8,575.45 euros, and the maximum 194,750 euros.
The purpose of the reform is to increase entrepreneurs' security and unify how pension insurance companies determine YEL income. By taking out YEL insurance, you take care of both your pension and your social security. YEL insurance provides protection in various life situations – for example, if your work ability is impaired, or you take parental leave.
Entrepreneurs are entitled to YEL sickness allowance
Entrepreneurs are entitled to Kela’s sickness allowance, which covers losses in earnings due to disability lasting less than a year. The sickness allowance must be applied for from Kela after two months from the beginning of the disability.
The sickness allowance is paid after disability has lasted at least for the qualifying period. If the entrepreneur has YEL insurance, the qualifying period is the date of falling ill. If the entrepreneur does not have YEL insurance, the qualifying period is the same as that for wage-earners: the day of falling ill and the following nine business days.
What is the difference between YEL land TyEL?
Self-employed persons’ pension insurance (YEL) and the employer’s pension insurance (TyEL) both provide cover for retirement. Which one to choose depends on whether the work was done as an assignment or in an employment relationship. The general rule is that if you are an entrepreneur and fulfil the criteria set out above, you choose YEL.
Uncertainty in choosing the right pension insurance may be caused by the fact that the company form, one’s position in the company, and family relations affect the type of insurance chosen.
- As a rule, YEL insurance is sufficient for a trader or self-employed person. If salary is paid to the family member of a trader or self-employed person, TyEL insurance is used.
- YEL insurance should be selected in a limited liability company if the shareholder holding a managerial position alone owns more than 30 per cent or, together with their family, more than 50 per cent of the company. If ownership is smaller, TyEL insurance should be chosen.
- YEL insurance is taken out for a partner working in a general partnership. TyEL insurance is selected for a family member to whom salary is paid.
- In a limited partnership, YEL insurance is taken out for a general partner working in the company. Silent partners working in the company and family members who are paid a salary must be insured with employees’ pension insurance or TyEL insurance.
- Freelancers may have an employment relationship with one customer and assignments with other customers. In employment relationships, the employer is responsible for insuring employees with TyEL pension insurance. A situation, for example, where the employer pays salary to a freelancer and supervises the work is considered an employment relationship. If some other compensation than salary is paid, the freelancer must ensure their pension cover by taking out YEL insurance.
One-stop service for entrepreneurs’ all insurance policies
You can take out the mandatory YEL insurance easily from our partner Ilmarinen. The partnership allows you to easily take care of insurance matters for the entrepreneur and company all at the same time. Our aim is to offer customers a customer relationship team through which communication is smooth and things are taken care of successfully. This allows our customers to focus on their business.