How is YEL income determined?
YEL income is the monetary value assigned to a self-employed person’s work input. It is not directly equivalent to the actual wages or salary drawn from the business but, rather, the overall value of the self-employed person’s work input. Self-employed persons can also, for example, withdraw capital income as compensation for their work input or receive other types of fringe benefits, so salary amounts do not tell the whole truth. On the other hand, self-employed persons may also be engaged in such forms of business in which salary payments, as such, are not applicable.
When determining the YEL income, the pension company takes the following into account:
- The number of working hours;
- The turnover of the company;
- The possible seasonal nature of the work; and
- The number of other employees.
YEL income is always determined as an annual sum, which is estimated as corresponding to the self-employed person’s work input over a 12-month review period. In order to help determine the YEL income, it may be easier to first define the value of the work input on the monthly level and then multiply that amount by 12 for the annual sum.
If you have entrepreneurial activities in more than one company, all of your entrepreneurial activities are insured under a single YEL policy. Your overall work input is taken into consideration in the YEL income amount.
If changes occur in your business activities that affect the amount of your work input, the pension company must be notified of the change as soon as possible in order to enable the pension company to adjust your YEL income to the proper level. Such a change might be, for example, if your work becomes part-time or expands to full-time. Notifying Elo of any changes is easy using our Online Service. YEL income cannot be adjusted retroactively, so it’s important to notify us about any changes as quickly as possible. YEL income cannot be determined on the basis of the profitability of the business nor is it affected by temporary fluctuations in earnings, such as during a summer holiday taken by the entrepreneur.