The self-employed person’s pension insurance

Under the Self-Employed Persons' Pensions Act you have to take out pension insurance for self-employed persons if  

• you are between the ages of 18 and 69.
• your business has been operating for at least four months 
• your income during the year exceeds the minimum limit for pension insurance, which is EUR 9 010.28.  

Note that the obligation to take out pension insurance also applies to part-time entrepreneurs if they fulfil the above-mentioned criteria.

If you are the recipient of an old-age pension and are an entrepreneur, pension insurance is voluntary. Any voluntary insurance will also contribute to your old-age pension.

You are considered to be an entrepreneur if you work for your own company and one of the following conditions is met:

• you are a private trader, a partner in a general partnership or  a general partner in a limited partnership  
• you hold more than 30%, or, with your family members, more than 50% of a limited liability company’s shares or their voting rights
• you are in a management position in a cooperative and you enjoy there more than a 30% alone, or, with your family members, more than a 50% control. 

If you are an ordinary entrepreneur, take out pension insurance for self-employed persons (YEL). If you are a farmer, forest owner, professional fisherman or reindeer herder or receive a grant or a scholarship, take out pension insurance under the Farmers’ Pensions Act (MYEL).

If your income is under the lower threshold but you satisfy the other requirements for insurance, you can take out pension insurance voluntarily. You can also take out voluntary insurance if you are on a state pension and you run a business.

You can obtain a YEL insurance from an employment pension provider. Pharmacy and forest sector entrepreneurs have the option of taking out their insurance from the pension funds that provide employment pension services for these sectors. You can take out pension insurance under the the Farmers’ Pensions Act (MYEL) with the Farmers' Social Insurance Institution Mela. Note that you cannot substitute any kind of voluntary pension insurance for pension insurance under the Self-Employed Persons' Pensions Act.

Take the initial steps in acquiring pension insurance for a self-employed person within a period of six months from the time your business started up, if you meet the conditions provided in the Self-Employed Persons' Pensions Act. If you do not take out insurance until later, you will have to pay a default penalty in addition to the premium.

The Finnish Centre for Pensions oversees matters connected with work pension insurance. If you have not taken out pension insurance even if you should have, the Finnish Centre for Pensions may ask you provide an account of your obligation to take a pension insurance afterwards and tell you to take out pension insurance for self-employed persons, if necessary. If you still fail to take out insurance within a reasonable period, the Centre make take out a policy for you, with retroactive effect. Note that, in such a case, the insurance premium for the default period may be as much as double.

Your pension insurance premium now and your pension in the future depend on how much your income is. Your pension will accrue, depending on your age, at a rate of at least 1.5% of your annual income.

Your pension institution will make an overall assessment of your income and its margin of manoeuvre when you take out an insurance. The assessment is influenced by the median salary of the sector, the value and amount of your work input, as well as the scope of your business and your professional skills. Calculate your recommended YEL income with the recommended YEL income calculator. Your pension institution checks your YEL income every three years.

The premiums are the equivalent of roughly 25% of your income. Note that you may deduct your pension insurance premiums in either your personal or your company’s tax return. 

If you are a budding entrepreneur, you will receive a 22% discount on your pension insurance contributions for a four-year period. If your business activities end before the four years have passed, you may use the reductions for the remaining period in a later enterprise.

Almost all earnings-related social benefits are also calculated on the basis of your income. Such benefits include, for example, the sickness allowance, maternity, paternity and parental allowances, parental allowance (when the estimated due date of your child is on or after 4 September 2022), rehabilitation subsidy and unemployment benefit paid by Kela. Additional information on securing an entrepreneur’s livelihood

Both the pension insurance arrangements for self-employed persons, YEL and MYEL, guarantee you pension cover when you retire.

If your ability to work has deteriorated, you can use your pension insurance for self-employed persons to participate in vocational rehabilitation. If you are completely unfit for work, you can receive a disability pension.

Pension insurance for self-employed persons also provides the opportunity to switch to a partial early state pension. 

If you die, your family has the right to a survivor’s pension. If you are MYEL-insured, if you die your family can also apply for compensation under a group life insurance policy.    

As an agricultural entrepreneur, under MYEL insurance you are also entitled to  insurance against occupational accidents and diseases and a MELA sickness allowance. If there are animals on your farm, you have the right to farm relief.

Further information about YEL insurance is available from your employment pension provider and the Centre for Pensions. For MYEL insurance contact the Farmers' Social Insurance Institution.