YEL legislative reform

The reform of the Self-employed Persons’ Pensions Act (YEL) entered into force at the start of 2023. It includes, among other things, new provisions concerning the YEL income review. The legislative reform was motivated by the need to adjust the YEL income in those cases where it does not correspond to the self-employed person’s work input. Since the YEL income serves as the basis for the social security of self-employed persons, it is important to keep it up-to-date in response to any changes occurring in entrepreneurial activities. According to the law, pension companies are obligated to carry out YEL income reviews for their customers on a regular basis, and all pension companies in Finland conduct the reviews in compliance with the same principles. 

The need to review the YEL income of a self-employed person depends on the current amount of the YEL income and the date of its most recent essential revision. All pension companies will proceed stepwise and conduct the reviews as follows: 

• for YEL income levels under 25,000 euro in 2024, and 
• for YEL income levels of more than 25,000 euro in 2025. 

However, the obligation to review does not concern the YEL incomes within the above limits that have been updated essentially or officially reviewed during the past three years. An essential change means a change of more than 15 percent.

Moreover, the review is only applicable to currently valid YEL policies. In other words, your YEL income will not be subject to a review and adjustment if your YEL policy ends with retirement on old-age pension or other reason already before the scheduled review.

In future, the YEL income of those insured under YEL will be reviewed and possibly adjusted on a regular basis every three years. Elo will issue a proposal for a new YEL income through Elo’s Online Service and ask for the self-employed person’s opinion on the proposal. If the review shows that the self-employed person’s YEL income is already at the recommended level, no YEL income proposal will be presented.

The self-employed person has two weeks to respond to the proposal, and then Elo will make a decision on the new YEL income based on the available information. Elo will start YEL income reviews this year in summer 2024.

If your YEL income is subject to a review, we will contact you and ask you to respond to our proposal for a new YEL income. If you have chosen the paperless service, you will receive an email from us. Otherwise, we will mail you a letter.

This year (2024), the review and possible adjustment will be done for YEL incomes under 25,000 euro that have not been essentially changed or officially reviewed during the past three years. An essential change here means a change of more than 15 percent. 

You will receive a decision on the YEL income review and possible adjustment, including the amount of the new YEL income and the date of its entry into force.

When you receive information from us concerning the review and adjustment of your YEL income, you should log in to Elo’s Online Service to see the proposed YEL income. You have two weeks to respond to the proposal. Then, we will make a decision on your new YEL income on the basis of available information. 

If you are planning to continue your entrepreneurial activities to the same extent as during the past few years, we recommend that you approve the proposal so as to ensure that your YEL income corresponds to the value of your work input. 

If, however, your entrepreneurial activities will no longer continue at the same level as in the previous years, you can suggest another amount for your YEL income. If necessary, we will ask you to provide motivations for the change suggested by you or keeping the YEL income unchanged.

There is no need for you to respond to our proposal if you feel the proposed YEL income is at the correct level. If you do not respond to the proposal, we will make a decision on a new YEL income for you on the basis of the information available to us.

You know your own entrepreneurial activities best: If you disagree with our proposal, submit your own proposal with a brief justification, so we can take your opinion into consideration when determining a new YEL income for you. It’s easy and secure to respond through Elo’s Online Service.

You can influence the timing of your YEL income review by always keeping your YEL income at a level that corresponds to the value of your work input. If your YEL income is not currently up-to-date, it is a good idea to adjust it without delay. For assistance in determining the proper level of your YEL income, please contact our Customer Service. When your YEL income is at the correct level, the review will not call for any adjustment. 

In the future, your YEL income will be reviewed every three years if it is not changed or adjusted in the meantime.  

You can read more about the progress of reviews under Whose YEL income will be reviewed this year?

Elo will base its proposal for a new YEL income on 

• the median salary in the relevant field of business 
• the median turnover in the relevant field of business 
• the information acquired from the Tax Authority concerning the self-employed person’s turnover during the preceding three years. 

The possible part-time nature of entrepreneurial activities will also be taken into consideration in the calculation. On the basis of these factors, a new YEL income is calculated for the self-employed person, known as the proposal for YEL income. All pension companies calculate the proposal for YEL income using the same grounds.

In terms of increases to the amount of YEL income, the law includes certain restrictions applicable to the first two review rounds. The review can result in an initial adjustment of no more than EUR 4,000 and the total of the increases in the first two review rounds can be EUR 8,000 at most. The pension company may raise the YEL income by these amounts even without the self-employed person’s consent if there are no grounds for not to increase the YEL income. An increase of 4,000 euro translates into an increase of approximately 80 euro/month in the YEL contribution. It is possible to increase the YEL income by a larger sum on the self-employed person’s own initiative

According to law, the new YEL income will be effective from the beginning of the second month following the initiation of the review process.

In practice, this means that if you are informed of the adjustment of your YEL income in June, your new YEL income will be valid from the beginning of August. The change of YEL income will thus affect your YEL contributions from August onwards.

No adjustment will be done retroactively. 

You will receive a decision on the adjustment of your YEL income if the review calls for a change. You may appeal against the decision if you find it has been made on incorrect grounds. Instructions for an appeal are attached to the decision on YEL income. If you have taken the paperless service into use, you can view the decision in Elo’s Online Service. Otherwise, we will mail you the decision as a letter.

No, it does not. The obligation to conduct YEL income reviews and the related principles are the same for all pension companies. All companies will proceed one year at a time as scheduled by law and apply a shared calculation service for the determination of the amount of YEL income. If you transfer your YEL policy to another company, the receiving pension company will be in charge of the review and adjustment.