Pension accrual from employment
Employment pension is accrued on the basis of the employee’s earnings and the self-employed person’s YEL income. For all ages, pension accrues at a rate of 1.5% of the wages per year. As an exception, those aged 53–62 accrue pension at a rate of 1.7% per year during the years 2017–2025.
An employee’s pension accrues from annual earnings that are increased with the wage coefficient to the level of the retirement year and from which the employee’s pension contribution is deducted.
A self-employed person’s pension is calculated on the basis of the average annually-reported income under YEL. The effect of flexible contributions will also be taken into account in reported income. Any unpaid YEL insurance contributions will reduce the pension.
Until the end of 2004, pension was determined according to employments and periods of selfemployment, and pension accrued at an annual rate of 1.5% starting from the person’s 23rd birthday.