Generation of the TyEL contribution
The TyEL insurance contribution is determined on the basis of the calculation grounds ratified by the Ministry of Social Affairs and Health. With the exception of client bonuses and expense loading component, the TyEL contribution bases are the same for all pension insurance companies.
The generation of the TyEL contribution also depends on the size of your company. The payroll sum from two years ago determines whether you are considered a large-scale or a small-scale employer. If your company’s payroll sum exceeded EUR 2,197,500 in 2021, you are considered a large-scale employer in 2023.
TyEL contribution components
The TyEL contribution is calculated and paid on a monthly basis. The employer reports the earnings of their employees to the Incomes Register, generally within five days from the salary payment date. Elo will retrieve the relevant earnings information from the Incomes Register and utilise this information to calculate the TyEL contribution.
The TyEL contribution consists of following components:
- Old-age pension component
- Statutory charges component
- Premium loss component
- Expense loading component
- Disability pension component
- Pooled component
- Client bonus
The old-age pension component included in the TyEL contribution is calculated in the same manner for all employers. It is calculated separately for each employment relationship and is an age and gender-dependent percentage share of the individual employee’s wages or salary. The old-age pension component covers part of old-age pensions.
The expense loading component is a business expense reserved for pension insurance companies for managing employment relationships and insurance policies, making pension calculations and pension decisions as well as for paying pensions. Starting on 1 January 2023, the pension insurance industry made a shift to a company-specific TyEL expense loading component. The Ministry of Social Affairs and Health confirms the expense loading calculation grounds for each company in advance and these grounds will remain unchanged throughout the year in question.
Elo’s basic expense loading fee
Elo’s basic expense loading fee is determined on the basis of the employer’s payroll for the previous year. The basic expense loading fee is collected from all TyEL insurance policies in Elo.
Elo’s large-scale company discount
If the 2022 payroll of an employer or Group insured by Elo was a minimum of two million euro, that customer is entitled to Elo’s large-scale company discount.
Elo’s constancy discount
If an employer’s insurance policy has been valid uninterruptedly during the period of 1 January 2020–31 December 2022, and earnings have been reported to the Incomes Register for each year, the employer is entitled to Elo’s constancy discount for long-term customers.
Elo’s expense loading fee refund
The expense loading fee collected from TyEL customers should cover the business expenses of the pension company and so must, therefore, be sufficient enough. Elo will refund the entire expense loading surplus during 2023 to those insurance customers who have paid TyEL contributions and whose policies will continue. The first refund will take place in 2024.
The pooled component is obtained by deducting the following items from the basic contribution:
• Old-age pension component
• Statutory charges component
• Disability pension component, as if it were in premium category 4
• Premium loss component, at the rate applicable to occasional employers
The TyEL contribution of a large-scale employer is affected by the premium category. The premium category is determined by the number of permanent disability and partial disability pensions granted to employees. As a large-scale employer, you will find the TyEL insurance payment category from Elo’s online service. Read more about premium categories in the TyEL contribution guide for large-scale employers.
You can affect the company’s premium category by keeping work ability risks under control
Work ability management promotes fluent work as well as the work ability, health and safety of employees. It means good everyday management, in which work ability issues can be dealt with proactively in addition to managing performance. The effects of work ability management show concretely in sickness absence and disability costs as well as the company’s productivity. The aim of Elo’s work ability management services is to help client companies manage their disability risks.