Generation of the TyEL contribution

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 statutory charges component is the same for all employers. It covers the costs of the Finnish Centre for Pensions, the judicial administration charge paid to the Pension Appeal Court and the fee paid to the Financial Supervisory Authority.

The premium loss component covers all contract employers and is used to cover any losses caused by non-received payments. The amount of the premium loss component depends on the size of the company. The premium loss component is applied to large-scale employers at a reduced rate, as they rarely have payment defaults.

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 disability pension component varies according to an employer. The amount of the component depends on employees’ age distribution and earnings as well as the size and possible premium category of the company.

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 client bonus is a share of the profit of the employment pension company that is transferred to the customer, and its amount is affected by the solvency of the employment pension company and its operational efficiency. Client bonuses are calculated once a year in spring. The Ministry of Social Affairs and Health ratifies employment pension company specific bonus principles.