Earned income under YEL

The self-employed person's future pension is based on the reported earned income confirmed for the YEL insurance. The level of the earned YEL income determines both the size of the pension and the contribution.

All confirmed earnings affect the pension size, because pension is computed on the basis of the average earned income, calculated over the entire period of self-employment. The earned income cannot be altered retroactively.

The national sickness allowances from the Social Insurance Institution (Kela) are also determined on the basis of the reported earned income. The amount of the earned income is also significant for the self-employed person’s unemployment security as well as for the disability benefits from accident insurance.

In accordance with the YEL scheme, the earned income must be equivalent to the wage or salary that would be payable if the self-employed person were replaced by an equally skilled employee doing the same kind of work.

Under YEL, the annual earnings must not exceed EUR 153,875. If the annual earnings are estimated at less than EUR 6,775.60 (in 2010), YEL insurance is not necessary.