YEL is the cornerstone of an entrepreneur’s social security
Sickness benefit, parental benefit, unemployment insurance, and retirement pension; YEL is linked to all of these – and many other entrepreneur benefits.
YEL insurance (a self-employed person’s pension insurance) is the basis of an entrepreneur’s pension and linked to many entrepreneur benefits. The retirement pension is certainly the most familiar pension benefit offered by YEL. The reward for working-life contributions, looming in the distant future, grows slowly at an annual rate of 1.5 per cent of the income declared for YEL insurance.
– The declared income is based on the value of the entrepreneur’s work contribution, which, in turn, is linked to work performed, for example, in terms of hours worked, says the development manager at the Elo pension insurance company, Kristiina Sandén. Work contribution may be slightly vague as a concept, but Sandén suggests that it should be proportional to what an entrepreneur would reasonably be willing to pay to an employee to do their work.
Whereas an employee does not have to think about how to manage their social security, an entrepreneur has much greater role in defining their level of security. However, Sandén points out that this latitude goes hand in hand with big responsibility.
– I recommend making decisions about YEL thoughtfully and considering the facts. The most important thing is to understand the effects of the decisions.
– The waiting period is shorter than for an employee, and it compensates for an entrepreneur’s inability to work for their own company. When the declared income is at a reasonable level, so is the sickness benefit.
Sandén also wants to highlight the topical infectious disease benefit, which is also determined by the income declared for YEL.
– I think it is possible, at this stage of the coronavirus pandemic, for anyone to contract the disease or be affected by a quarantine imposed by the authorities.
– In this case, we are not talking about medical rehabilitation. In the context of pensions for the self-employed, rehabilitation refers to measures that support an entrepreneur in their efforts to return to working life if they cannot continue their own business due to illness, injury or disability.
In practice, rehabilitation can, for example, take the form of studying for a new profession.
– You obviously have to think about making ends meet if, for example, the situation requires you go to study for three years for a new profession. The rehabilitation allowance makes this possible.
An entrepreneur can also apply for a subsidy to continue their own business. The subsidy can be granted, for example, for the acquisition of tools.
The daily allowances for parental leave are determined on the basis of the entrepreneur’s declared income in the 12-month period preceding their entitlement to the daily allowance.
Those planning a family should also know the survivor’s pension cover, in accordance with the legislation on the pensions of self-employed persons. An entrepreneur’s underage children and spouse are entitled to a survivor’s pension if the entrepreneur should die.
An entrepreneur can also receive earnings-related unemployment allowance by joining Yrittäjäkassa, an unemployment fund for entrepreneurs. Even at the minimum level (an income of 13,247 euros per year in 2021), the unemployment allowance is almost 170 euros higher than Kela’s basic allowance.
– If an entrepreneur declares an income below the minimum level, they are only entitled to a means-tested labour market subsidy, the amount of which is affected by any other income they may have.
– Entrepreneurs declare the same income for their accident insurance as they do for their YEL insurance. Any compensation is calculated based on the income declared for YEL.
– This has apparently been quite popular among entrepreneurs, says Sandén.
Early withdrawals from the retirement pension can be made to get extra income and to continue working as before. With the help of an early retirement pension, an older entrepreneur can also work less or stop working altogether.
YEL insurance, then, accompanies entrepreneurs throughout their careers.
– If risks materialise during a career, the YEL insurance holder is paid compensation in the form of various benefits and pensions. An entrepreneur definitely feels less stress if their YEL insurance is in order.
– The declared income is based on the value of the entrepreneur’s work contribution, which, in turn, is linked to work performed, for example, in terms of hours worked, says the development manager at the Elo pension insurance company, Kristiina Sandén. Work contribution may be slightly vague as a concept, but Sandén suggests that it should be proportional to what an entrepreneur would reasonably be willing to pay to an employee to do their work.
Whereas an employee does not have to think about how to manage their social security, an entrepreneur has much greater role in defining their level of security. However, Sandén points out that this latitude goes hand in hand with big responsibility.
– I recommend making decisions about YEL thoughtfully and considering the facts. The most important thing is to understand the effects of the decisions.
YEL protects the entrepreneur in case of sickness
YEL does not only offer security in old age. If an entrepreneur falls ill and is unable to work, they can apply for the Kela (the Social Insurance Institution of Finland) sickness benefit, based on the income declared for YEL insurance. The sickness benefit is paid to the entrepreneur after a one-day waiting period.– The waiting period is shorter than for an employee, and it compensates for an entrepreneur’s inability to work for their own company. When the declared income is at a reasonable level, so is the sickness benefit.
Sandén also wants to highlight the topical infectious disease benefit, which is also determined by the income declared for YEL.
– I think it is possible, at this stage of the coronavirus pandemic, for anyone to contract the disease or be affected by a quarantine imposed by the authorities.
A career continued through rehabilitation
If an entrepreneur is under threat of becoming permanently incapacitated for work, a disability pension in accordance with the legislation on the pensions of self-employed persons may be considered. First, however, the entrepreneur’s opportunities for vocational rehabilitation are explored.– In this case, we are not talking about medical rehabilitation. In the context of pensions for the self-employed, rehabilitation refers to measures that support an entrepreneur in their efforts to return to working life if they cannot continue their own business due to illness, injury or disability.
In practice, rehabilitation can, for example, take the form of studying for a new profession.
– You obviously have to think about making ends meet if, for example, the situation requires you go to study for three years for a new profession. The rehabilitation allowance makes this possible.
An entrepreneur can also apply for a subsidy to continue their own business. The subsidy can be granted, for example, for the acquisition of tools.
YEL protects the family
The arrival of a new baby in the family is a joyful thing – and it doesn’t have to be a financial blow to an entrepreneur. When the declared income is set at an appropriate level, the entrepreneur can be financially secure while spending time with their baby.The daily allowances for parental leave are determined on the basis of the entrepreneur’s declared income in the 12-month period preceding their entitlement to the daily allowance.
Those planning a family should also know the survivor’s pension cover, in accordance with the legislation on the pensions of self-employed persons. An entrepreneur’s underage children and spouse are entitled to a survivor’s pension if the entrepreneur should die.
Protection against unemployment
There is a possibility that your business idea does not take off. When an entrepreneur’s income is at least 13,247 euros a year and the time criteria of the work requirement are met, they are entitled to the basic unemployment allowance paid by Kela (the Social Insurance Institution of Finland). The basic unemployment allowance is always the same, regardless of the income declared for YEL.An entrepreneur can also receive earnings-related unemployment allowance by joining Yrittäjäkassa, an unemployment fund for entrepreneurs. Even at the minimum level (an income of 13,247 euros per year in 2021), the unemployment allowance is almost 170 euros higher than Kela’s basic allowance.
– If an entrepreneur declares an income below the minimum level, they are only entitled to a means-tested labour market subsidy, the amount of which is affected by any other income they may have.
Accident insurance requires YEL insurance
YEL insurance is linked to the entrepreneur’s accident insurance: the entrepreneur can only take out accident insurance if they have valid YEL insurance.– Entrepreneurs declare the same income for their accident insurance as they do for their YEL insurance. Any compensation is calculated based on the income declared for YEL.
Working a shorter day or earning extra income at the end of a career
Towards the end of a career, YEL brings flexibility in the form of a partial early retirement pension. Specifically, entrepreneurs can make early partial withdrawals from the pension they have accrued before retirement.– This has apparently been quite popular among entrepreneurs, says Sandén.
Early withdrawals from the retirement pension can be made to get extra income and to continue working as before. With the help of an early retirement pension, an older entrepreneur can also work less or stop working altogether.
YEL insurance, then, accompanies entrepreneurs throughout their careers.
– If risks materialise during a career, the YEL insurance holder is paid compensation in the form of various benefits and pensions. An entrepreneur definitely feels less stress if their YEL insurance is in order.