YEL legislative reform
The reform of the Self-Employed Persons’ Pensions Act (YEL) entered into force on 1 January 2023. The purpose of the reform was to specify the factors to be considered in determining the YEL income of self-employed persons. As a result of the reform, pension companies will review and possibly adjust the YEL income of those insured under YEL every three years in the future.
On this page, you will find some frequently asked questions and our responses concerning the YEL legislative reform. New information and guidelines will be added continually.
The YEL income is the basis for calculating your insurance contribution and future pension
The YEL income serves as the basis for calculating your YEL insurance contribution and, in the future, your pension. The YEL income also affects the level of various social benefits, such as sickness allowances paid by Kela.
YEL income refers to the monetary value of your work input as a self-employed person. It is not necessarily equal to your salary or wages drawn from the business but, instead, it reflects the value of your work input within your entrepreneurial activities as a whole.
You can view your current YEL-income from our online service and update it at any time. You can also see your income on the YEL insurance invoice.
YEL income reviews and adjustments in 2024
Your YEL income will be reviewed this year if all of these conditions are met:
- your YEL income currently falls under 25,000 euro,
- your YEL policy has been valid for a minimum of three years
- you have not made changes to your YEL income or it has not been reviewed in the past three years.
Questions and answers concerning YEL income reviews
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.
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.
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.
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.
Keeping the YEL income at the correct level provides security for the self-employed
The YEL policy is the most important insurance for a self-employed person. The level of YEL income has an impact on your future pension, social security benefits and YEL contributions. Therefore, it is essential that your YEL income matches the value of your actual work input as closely as possible.
Elo will provide you assistance in determining the correct amount for your YEL income. Try out Elo’s YEL calculator to obtain a recommendation for a proper YEL income. The recommendation is based on the median salary of your field of business and your estimated turnover. The common YEL income calculation service shared by all pension companies is used for the calculation of the recommended YEL income. The YEL calculator will also show the impacts of the amount of YEL income on your future earnings-related pension and different social benefits.