WHAT IS THE EARNED INCOME USED FOR CALCULATING YEL PENSIONS?

An YEL pension is calculated from a self-employed person average earned income during his/her entire working career and not just for the earned income of the years preceding retirement. All confirmed earned incomes affect the amount of the YEL pension in proportion to their periods of validity. Earned incomes before the age of 23 are not included in the pension, unless the self-employed person becomes disabled or dies before the age of 23.

If the self-employed person has not reported a change in his/her earned income, the pension is calculated from the original earned income, which has been index-adjusted to the level of the first year of retirement. If the earned income has varied, the pension is calculated on the basis of the index-adjusted average earned income for the entire period of self-employment.