As an employer you take care of your employees’ pension cover by paying the TyEL contribution. The size of the contribution depends on your size as an employer and the client bonuses you receive. The TyEL age limits determine the TyEL contribution percentage.
The TyEL contribution is a certain percentage of the actual payroll, i.e. the wages and salaries that an employer pays to its employees under an employment contract.The TyEL contribution is annually confirmed by the Ministry of Social Affairs and Health.
Starting in 2019, employers will report their employees’ earnings payment data to the Incomes Register. The TyEL contribution will be calculated monthly based on the TyEL earnings payment data reported to the Incomes Register.
As a general rule, the TyEL earnings are the same as the gross salary paid to the employee. Wages and salaries are reported to the Incomes Register using the income types approved by the Incomes Register.
The employer does not pay the TyEL contribution alone; employees also pay their share of it. In 2020, the employer’s share of the contribution is on average 16.95% and that of the employee 7.15% of the gross payroll.
TyEL insurance contribution, % of payroll |
2019 |
2020 |
Average TyEL insurance contribution |
24.4 |
24.4 |
Basic TyEL contribution |
25.2 |
25.3 |
The selection of due date affects the amount of the TyEL contribution. As a general rule, the TyEL insurance contribution falls due on the last day of the month following the payment of the wages or salaries. You can also select a due date that occurs in the second month following the payment of the salaries or wages. In this case, insurance contribution interest will be calculated on the insurance contribution for the second month.
Other factors influencing your TyEL contribution are your size as an employer, the length of your customer relationship with Ilmarinen and the amount of your client bonus.
The TyEL contribution percentage is made up of six components, two of which are used to raise funds for financing old-age and disability pensions. The largest of the six components is the pooled component that is used to fund, for example, survivors’ pensions and the index increments of all pensions. The remaining components are used for managing pensions and covering premium losses. The client bonus is a discount granted by us to our customers, which reduces the TyEL contribution.
|
2019 |
2018 |
Old-age pension |
3.5 |
3.5 |
Disability pension |
0.9 |
1.0 |
Pooled component |
19.8 |
19.8 |
Other components |
0.8 |
0.8 |
Client bonus, i.e. discount |
- 0.6 |
- 0.7 |
Average TyEL insurance contribution |
24.4 |
24.4 |
Since 1 January 2017, the employee’s pension insurance contribution has been equal in size for all age groups. For employees aged 53–62, the contribution is larger than for others until the end of the transitional period, the end of 2025, as the employees also accrue more pension during the transitional period. The larger contribution is applied from the beginning of the month after the month in which the employee turns 53 until the end of the month in which she or he turns 63.
Employee contribution, % of pay |
2019 |
2020 |
Employee between 17 and 52 years of age |
6.75 |
7.15 |
Employee between 53 and 62 years of age |
8.25 |
8.65 |
Employee between 63 and 67 years of age |
6.75 |
7.15 |
Withhold the employee’s contribution from his or her pay also in the following situations:
All wages and salaries must be reported to the Incomes Register.
The client bonus is a discount that a contract employer receives in spring. The amount of the client bonus to be distributed depends on the efficiency of our operations and our investment returns. The client bonus is calculated in spring and taken into account in the TyEL invoice following the calculation. The amount of the insurance-specific bonus is impacted by the customer’s size and the length of the customer relationship with Ilmarinen. For a new company or a customer transferring from another company, the client bonus starts to accumulate from the beginning of the customer relationship.
The client bonuses paid in 2019 are based on new criteria. Ilmarinen’s new client bonus model puts a stronger emphasis on the customer’s payroll. The bonus criteria are more fair towards both old and more recent customers.
To check the client bonus, log in to our online service.
The bonuses you will receive are influenced by:
The client bonus applies to you from the day on which your TyEL insurance begins with Ilmarinen. You will receive your first bonus during your second insurance year. You will receive the bonus even if you transfer your insurance to another earnings-related insurance company. In future, the customer will receive a client bonus for the final year on the same basis as if the insurance were to continue. Due to company-specific differences, the client bonuses to be paid after the final year are approximately half of the previous amount. Additional client bonuses will be paid to the customer for up to three years after the termination of the insurance. The new rules on additional client bonuses apply to policies that expired after 31 December 2016 due to a transfer.
The fact that you receive client bonuses is a sign of Ilmarinen’s solvency and successful investment operations: the return on investments has covered all incurred costs and is large enough to cover more than just current and future pensions. The return is then distributed to our customers as client bonuses.
The size of a contract employer influences the amount of the TyEL contribution. The size of a temporary employer makes no difference to the contribution as temporary employers only pay the TyEL basic contribution.
Whether a contract employer is considered to be a large or small one depends on the payroll, which is reviewed annually. In 2020, your size depends on the 2018 payroll: a contract employer is a small employer if its payroll was less than EUR 2,086,500 and a large one if its payroll exceeded that amount.
Large employer's TyEL contribution (pdf)
Small contract employers always only pay the TyEL basic contribution, whereas large contract employers belong to a certain contribution category.
The disability pension contribution is based on the contribution category. The disability pension contribution is used to fund employees’ disability and partial disability pensions.
The amount of the contribution depends on the payroll and the contribution category. The contribution category depends on the amount of disability and partial disability pension that your employees receive.
There are 11 contribution categories. In the lowest contribution category, you pay the least disability pension contributions, and in the highest category the most. You belong to the lowest contribution category when your employees have received few disability pensions and partial disability pensions during two calendar years. The disability pension contributions for 2018 are based on the pensions that your employees received in 2015 and 2016; the contributions for 2019 are based on the pensions paid in 2016 and 2017. Mergers and acquisitions also impact the contribution category.
The table shows the size of your disability pension contribution when your payroll is EUR 5 million or more. If your payroll is smaller or if you wish to have more detailed information about the contribution categories, read our brochure ’TyEL Insurance Contribution for Large Businesses’.
Payroll |
MEUR 5 |
MEUR 15 |
MEUR 60 |
|||
Contribution category |
Contribution, EUR |
Contribution, % |
Contribution, EUR |
Contribution, % |
Contribution, EUR |
Contribution, % |
11 |
64,000 |
1.3 |
386,000 |
2.6 |
2,970,000 |
5.0 |
10 |
60,000 |
1.2 |
330,000 |
2.2 |
2,430,000 |
4.1 |
9 |
55,000 |
1.1 |
274,000 |
1.8 |
1,890,000 |
3.2 |
8 |
52,000 |
1,0 |
233,000 |
1.6 |
1,485,000 |
2.5 |
7 |
50,000 |
1.0 |
205,000 |
1.4 |
1,215,000 |
2.0 |
6 |
48,000 |
1.0 |
177,000 |
1.2 |
945,000 |
1.6 |
5 |
46,000 |
0.9 |
155,000 |
1.0 |
729,000 |
1.2 |
Base category 4 |
45,000 |
0.9 |
135,000 |
0.9 |
540,000 |
0.9 |
3 |
44,000 |
0.9 |
115,000 |
0.8 |
351,000 |
0.6 |
2 |
42,000 |
0.8 |
99,000 |
0.7 |
189,000 |
0.3 |
1 |
41,000 |
0.8 |
85,000 |
0.6 |
54,000 |
0.1 |
Log in to our online service to find out how the contribution category influences your insurance contribution. This will give you an idea of the amount of disability pension contribution that you should prepare for. If you wish to receive an estimate sooner, contact our customer service at tel. +358 10 284 3722.
If you are worried about the contribution category, Ilmarinen’s tools for improving well-being at work are available to you. We will gladly assist you in matters related to well-being at work.
As a general rule, the TyEL insurance contribution falls due on the last day of the month following the payment of the wages or salaries.
On our online service, you can change the TyEL contribution due date so that it occurs during the second month following the payment of the salaries or wages. In this case, insurance contribution interest will be added to the insurance contribution for the second month.
On the Palkka.fi service, the TyEL insurance contribution always falls due on the last day of the month following the payment of the wages or salaries.
Interest rate, % of contributions |
|
2019 |
2018 |
Premium interest rate |
1 Jan. – 30 June |
2.0 |
2.0 |
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