Large employer’s TyEL contribution

Who is a large employer and what does the TyEL contribution consist of?

In 2024 you are a large employer if your company payroll exceeded EUR 2, 251, 500  in 2022. If your company payroll in 2022 was less than EUR 2, 251, 500 you are a small employer.

The payroll limit of a large employer changes yearly. See the payroll limits for previous years and the known payroll limits for future years on our website.

As a large employer, the size of your TyEL contribution is impacted by how much disability pension has been granted to your employees. This determines which contribution category your company belongs to.

Your insurance contribution is reduced by the client bonus and contribution loss discount. 

Read more about client bonuses
Read more about the contribution loss discount
Read more about a small employer’s TyEL contribution

By logging in to the online service, you can see your TyEL contribution percentage and an estimate of your full TyEL contribution.

As a large employer you belong to a contribution category

As a large employer you always belong to a contribution category. Which one depends on how much disability pension and partial disability pension has been granted to your employees.

The contribution category impacts the TyEL contribution, more specifically its disability pension component, i.e. the disability pension contribution. The size of your company determines the weight of your contribution category, i.e. how much the contribution category impacts the TyEL contribution.

Contribution category

The more disability pensions or partial disability pensions have been granted to your employees, the higher your company’s contribution category.

There are altogether 11 categories. Contribution category 4 is the base category in which the disability risk corresponds with the average level.

If your company’s contribution category is three or lower, you pay a reduced disability pension contribution. If the contribution category is five or higher, you pay a higher disability pension contribution. Contribution category 4 does not impact the size of your disability pension contribution.

When you take care of your employees’ work ability, you can save significantly on your TyEL insurance contribution.

Read more about improving working ability from Work Ability Hub.

Pension expenditure 

We calculate your company’s pension expenditure for the year before last and the year preceding that based on how much your company has been granted in disability and partial disability pensions. Pension expenditure always applies to the year in which the pension is granted, i.e. the year during which your employee received the pension decision. The pension contingency, i.e. when your employee fell ill, may have happened even years earlier.

The pension expenditure is the pension liability calculated to the final day of the granting year, with which we prepare to pay your employee disability pension until they turn the lower age for old-age pension or until the pension ends for another reason, for example if the person gets well. This is why the pension expenditure of a single disability pension is primarily impacted by the age of the retired employee and the amount of pension they receive. In addition, the amount of pension expenditure is impacted by how long the time frame is between the pension contingency and the granting of the disability pension.

When we calculate the pension expenditure of your company, only the new, permanent disability and partial disability pensions are taken into account. The calculation of your company’s pension expenditure does not take into account temporary decisions or fixed-term disability pensions, i.e. cash rehabilitation benefits and partial cash rehabilitation benefits.

The pension expenditure also does not include the disability pensions that have been granted to your employees in certain exceptional cases. These exceptions include free-time accidents, rail traffic accidents, patient injuries and, under certain conditions, pensions for persons with impaired functional capacity.

The years-of-service pensions granted to your employees do not impact the pension expenditure nor, as a result, your company’s contribution category. The pension expenditure is also not impacted by the size of your company.

This table shows which disability pensions impact your company’s pension expenditure.

Disability pensions taken into account in pension expenditure

Allocation of disability pension liability between different employers

In addition to you, the employee’s pension expenditure and disability pension may also be the responsibility of the employee’s former employers. Whose responsibility the pension expenditure and responsibility for disability pension is depends on the timing of the pension contingency, i.e. when your employee fell ill, leading to a loss of work ability.

If your employee has only worked at your company and did not receive social benefits for illness during the two calendar years preceding the onset of the illness, the pension expenditure resulting from him or her and his or her disability pension are entirely the responsibility of your company.

If your employee also worked elsewhere during the two calendar years preceding the pension contingency or received social benefits during that time, the pension expenditure for your company declines. The pension expenditure is allocated in proportion to the wages or salary paid to the employee to those companies in which your employee worked during the two calendar years preceding his or illness.

If your employee did not work in your company during the two calendar years preceding the pension contingency, your company is not responsible for the pension expenditure or disability pension even if he or she was in your service when he or she was granted a disability pension.

This figure shows an example of how pension expenditure and disability pension liability can be divided up between employers.

Calculation example of allocation of disability pension liability

Pension: EUR 1,000 per month

Pension expenditure EUR 100,000:

• Pension expenditure for A EUR 20,000/50,000 x 100,000 = EUR 40,000
• Pension expenditure for B EUR 30,000/50,000 x 100,000 = EUR 60,000

Pension expenditure affects the contribution categories in 2024 and 2025.

Risk ratio

The risk ratio of your company is your company’s pension expenditure outcome relative to the average theoretical pension expenditure of a company of the same size.

When we calculate your company’s contribution category, we calculate the risk ratios always based on the pension expenditure for the year before last and the year preceding that.  In calculating your contribution category for 2024, we have calculated your company’s risk ratios for the years 2022 and 2021.

Category coefficient and contribution category

The average risk ratio for two consecutive years is called the category coefficient. The category coefficient determines which contribution category your company belongs to in the year in question.

When your company’s category coefficient is 0.80–1.19, your company belongs to contribution category 4. If your company’s category coefficient is 1.20 or more, your company’s contribution category is 5 or higher. If the category coefficient is less than 0.80, your company’s contribution category is 3, 2 or 1.

Your 2024 category coefficient and thus your contribution category is based on the average risk ratio for 2022 and 2021.

Check the table below to see how the category coefficient impacts your contribution category in 2024.

Category coefficents and contribution categories in 2024

Contribution category when circumstances change

The calculation of your contribution category may change if your company’s payroll changes, if you switch pension insurance companies or if your company is involved in an M&A.

If you transfer your company’s TyEL insurance entirely or partially to another pension insurance company, your previous pension insurance company’s contribution category and the information affecting it will transfer along with your insurance.

When you transfer your company’s insurance to Ilmarinen, we will first check whether your company has any insurance with us. If you do, we will review the policies’ information affecting the contribution category calculation and add them up. We then determine your company’s contribution category. This new contribution category will come into effect at the beginning of the following calendar year or starting at the moment of transfer if you change pension insurance companies at the turn of the year.

If your company does not have other insurance with us, we will define your contribution category based on the contribution category information that your previous pension insurance company reported to us.
If you transfer your company’s insurance to Ilmarinen partway through the year, your contribution category will be the same until the next calendar year as in your previous pension insurance company.

Read about how changes in entrepreneurial activities, i.e. M&A:s, impact TyEL insurance >

Administrative cost

From 2023 onwards, your TyEL contribution will be affected by the company-specific administrative cost. Read more about administrative cost.

Discounts

As a large employer, you receive discounts on your contributions. In addition to client bonuses, you receive a contribution loss discount. Read more about client bonuses.

Contribution loss discount

The contribution loss component is one component of the TyEL contribution. This contribution loss component is smaller for large employers than for small employers because large employers have a lower risk of becoming insolvent compared to smaller ones. This discount is called the contribution loss discount. You receive it when you are a large employer and contract employer.

We calculate your company’s contribution loss component and the discount you receive in the manner specified by the employment pension insurance companies’ shared calculation principles. The Ministry of Social Affairs and Health annually confirms the payroll limits that entitle companies to receive a discount and the discount percentages.

The contribution loss discount is a specific percentage of the TyEL earnings you pay. The discount is automatically included in your company’s insurance contributions, which we calculate based on the earnings payment reports you have made to the Incomes Register.

The larger your company, the larger the contribution loss discount. Your size as a large employer is determined by your payroll two years ago. That is why your company’s size in 2024 is determined by your 2022 payroll.

Your final contribution loss discount depends therefore on your discount percentage and the size of your company. Check your contribution loss discount percentage for 2024 in the table below.