YEL reform is progressing – what do the changes mean for entrepreneurs?
/ News
A reform of the Self-Employed Persons’ Pensions Act (YEL) is being prepared, which would change how YEL income is determined and increase flexibility. The government’s proposal on the matter has been published and sent for consultation. The aim is for the reform to enter into force on 1 January 2028.
More flexibility and freedom of choice in determining pension contributions
The key change in the reform concerns how the pension contributions, which determine the entrepreneur’s pension security, are calculated. In the future, entrepreneurs can choose between two options: whether to base their pension contributions on taxable income from their business activities or on the current YEL income model, where the basis is the median salary of employees in the same sector. In the new law, these models are called the income model and the overall assessment model. The entrepreneur could choose the method for determining pension contributions again every three years. In both models, the pension insurance company’s task is to monitor the level of YEL income annually.
Minimum level of YEL income will rise during the transition period
The overall assessment model includes a new minimum level. In practice, this means that the entrepreneur’s YEL income can no longer be less than half of the entrepreneur’s earned income. The change would be implemented gradually, so that the minimum level would rise during the transition period by five percentage points annually, from the current 30% to 50%.
Changes and flexibility
According to the new law, the discount for new entrepreneurs will be abolished, but at the same time, payment flexibility will be increased. The discount already granted before the law comes into force will remain valid. In addition, entrepreneurs will have the possibility to terminate their YEL insurance during periods of sickness or parental allowance.
We support entrepreneurs in the implementation of the new law
The new YEL legislation does not yet require any action from entrepreneurs. The law is currently being prepared and will then move into implementation. The changes will come into effect on 1 January 2028.
We support entrepreneurs with questions related to their pension security and will make the reform as easy and understandable as possible for them. We will communicate the effects of the reform and the details of the law on our website, in newsletters, and in customer webinars. As always, our customer service is here to help entrepreneurs.
More information on the topic can be found on the Ministry of Social Affairs and Health website (in Finnish): YEL-uudistus lausuntokierrokselle - Sosiaali- ja terveysministeriö