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YEL insurance
You need to take YEL insurance once you have initiated entrepreneurial activities. YEL insurance ensures that you accrue employment pension for your future retirement and provides security if you become ill, are on parental leave or find yourself unemployed.
YEL insurance is a statutory insurance and cannot be replaced by voluntary pension insurance. As a self-employed person, you are responsible for your own employment pension insurance.
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When do you need YEL insurance?
You need to take YEL insurance when you meet the following conditions:
Your YEL income is at least 9,010.28 € per year in 2024
The YEL income amount is your own estimate of the value of your work input in the company, and it should correspond to such wages that would be reasonable to pay to an employee for the same or similar work. YEL income, thus, refers to the monetary value of your own work input.
Your entrepreneurial activities have lasted without interruption for at least 4 months
Your entrepreneurial activities must last a minimum of 4 months in order for you to meet the obligation to take YEL insurance. Seasonal entrepreneurial activities must also be insured under YEL if the activities continue from one year to the next, even though they may cease for several months in between. For example, an entrepreneur who runs a summer kiosk is generally considered to have business activities that continue consistently from one year to the next.
You work in your own company
YEL insurance is not required if you simply own a company or part thereof, you must also be employed within the company. Entrepreneurial activities that are carried out part-time must also be insured under YEL if the other conditions for YEL insurance are met. If you simultaneously work as an employee for another company, your employer will also pay the statutory TyEL contributions, as prescribed by the Employee’s Pension Act, for your earnings from that company. In this way, you can simultaneously be insured under YEL and TyEL insurance.
You are a self-employed person between the ages of 18-68
The obligation to take YEL insurance starts at the beginning of the calendar month following the month in which the self-employed person turns 18 and continues until the end of the month in which the person turns 68. The upper age limit for insuring rises gradually according to one’s year of birth as follows:
- 68 years for those born in or before 1957
- 69 years for those born between 1958-1961
- 70 years for those born in or after 1962.
Who is considered a self-employed person within the different company forms?
A partner working within the business is considered to be self-employed and, therefore, must be insured under YEL insurance.
If a family member of a partner works in the business and receives a salary or wages, this person must be insured under TyEL insurance. If a family member works without receiving a salary or wages, this individual does not need to be insured under TyEL or YEL insurance.
Under the Self-Employed Persons’ Pensions Act, the following are considered as family members:
- The spouse or common-law spouse of the self-employed person,
- The self-employed person’s children, parents and their spouses, as well as registered partners who reside in the same household.
Siblings are not considered family members under YEL, even if they reside in the same household.
A responsible partner working within the company is considered to be self-employed and, therefore, must be insured under YEL insurance.
A silent partner (or a family member of a silent partner) who works in the company and receives a salary or wages must be insured under TyEL insurance. If the aforementioned persons work without receiving a salary or wages, they do not need to be insured under TyEL or YEL insurance.
Under the Self-Employed Persons’ Pensions Act, the following are considered as family members:
- The spouse or common-law spouse of the self-employed person,
- The self-employed person’s children, parents and their spouses, as well as registered partners who reside in the same household.
Siblings are not considered family members under YEL, even if they reside in the same household.
A shareholder who works in a managerial position in a limited company and owns alone more than 30 per cent or together with family members more than 50 per cent of the share capital or votes is considered to be a self-employed person that falls within the scope of YEL insurance. Indirect ownership, meaning ownership of a company through other corporations or groups, is included when calculating one’s share of ownership.
Family members who work in the limited company must also be insured under YEL insurance if the conditions for insuring are otherwise met.
Shareholders who are not in a managerial position but who work for the company and receive a salary or wages are insured under TyEL insurance. Those family members of shareholders who have no holdings in the company but who work for the company and receive a salary or wages also fall within the scope of TyEL insurance.
Under the Self-Employed Persons’ Pensions Act, managerial positions include:
- a managing director, a member of the board, a business area manager and an individual who has the right to sign for the company
- a member of the owner family who works in a small family business (regardless of their formal titles), and
- a person who works in a company and has actual control over company activities, even though that person has no formal managerial position in the company.
Under the Self-Employed Persons’ Pensions Act, the following are considered as family members:
- The spouse or common-law spouse of the self-employed person
- The self-employed person’s children, parents and their spouses, as well as registered partners who reside in the same household
Siblings are not considered family members under YEL, even if they reside in the same household.
An individual working in a managerial position who alone holds more than 30 per cent or together with family members more than 50 per cent of the controlling interest in the business is insured under YEL insurance.
Shareholders who work within the company and receive a salary or wages and whose share of ownership falls below the aforementioned percentages are insured under TyEL insurance. The same is true for those family members of shareholders who work for the company and receive a salary or wages. If they receive no salary or wages, they need not be insured under YEL or TyEL.
Under the Self-Employed Persons’ Pensions Act, managerial positions include:
- a managing director, a member of the board, a business area manager and an individual who has the right to sign for the company
- a member of the owner family who works in a small family business (regardless of their formal titles), and
- a person who works in a company and has actual control over company activities, even though that person has no formal managerial position in the company.
Take YEL insurance within six months
You need to take YEL insurance within six (6) months from the date on which you initiated entrepreneurial activities. The insurance should be taken as of the date on which your entrepreneurial activities that meet the YEL conditions have begun. If, for example, you notice in December that your input in your entrepreneurial activities, which began in September, has exceeded the euro amount limit as of the beginning of October and the other conditions for YEL insurance have been met, you must take YEL insurance in December to begin retroactively as of 1 October.
The annual YEL income limit of 9,010.28 € means 751 € per month.
- The figures below represent the monthly YEL income of a starting entrepreneur.
- YEL insurance should be taken once the monthly YEL income exceeds 751 €.
The Finnish Centre for Pensions oversees the insuring of entrepreneurs and, annually, sends out a reminder to those it believes may be obliged to take YEL insurance. The letter prompts entrepreneurs to clarify their own insurance needs. If you have received a letter and you are wondering whether you need YEL insurance, let us help you. Our Customer Service can be reached at +358 (0)20 694 730.