Who is YEL insurance for and when?
Pension insurance for the self-employed i.e. YEL insurance is a self-employed person’s personal insurance. Learn more about when you have an obligation to take out YEL insurance.
Why do I need YEL insurance?
As a self-employed person, you are responsible for your pension cover. You can take care of it by taking out self-employed person’s pension insurance, i.e. YEL insurance. YEL insurance is the basis for an entrepreneur’s pension and social security, which is why it is a statutory insurance.
YEL insurance is always personal, not company-specific. You can thus have several companies, but you only need one YEL insurance which covers all your entrepreneurial activities.
Who needs to take out YEL insurance?
You need to take our a self-employed person’s pension insurance when five specific conditions are met. You can test your need to take out YEL insurance below or read about the conditions.
More information about the five conditions of YEL insuring
You are aged between 18–67. The upper age limit for YEL insurance increases gradually. The obligation to insure ends at the latest at the end of the calendar month in which:
- An entrepreneur born in or before 1957 turns 68
- An entrepreneur born in 1958–1961 turns 69
- An entrepreneur born in or after 1962 turns 70.
If your self-employed activity lasts at least four consecutive months, take out YEL insurance. For shorter periods, you do not need YEL insurance.
Seasonal self-employed activity that lasts less than four months must also be insured if the other conditions are met. That means that while your activity may be interrupted for several months at a time, your entrepreneurship is still considered to continue regularly from one year to the next. An entrepreneur who runs a kiosk every summer, for example, could face the above situation.
Your YEL income should correspond to the value of your work input during one year. In this context, a year refers to a period of 12 months, not the calendar year. If you are a full-time entrepreneur, you almost always need to take out YEL insurance. Too low a salary, for example, is not grounds for not taking out YEL insurance.
You need YEL insurance also when you are a part-time entrepreneur if the lower limit for YEL income is exceeded and you meet the other conditions for YEL insurance. It is thus possible for you to work simultaneously as an employee and a part-time entrepreneur. In that situation, your employer provides you with employees’ pension insurance (TyEL) for your salaried work and in addition, you insure yourself as an entrepreneur by taking out self-employed person’s pension insurance (YEL).
The fact that you own your company does not obligate you to take out YEL insurance; you must also work in your company. The legal form of your company and your ownership share also play a role in determining whether you need to take out YEL insurance.
When should I take out YEL insurance?
You must take out YEL insurance when your entrepreneurial activity meets the above conditions. We recommend you to take care of it immediately, but it is possible to take out within six months.
You can also take out voluntary YEL insurance if the scale of your entrepreneurial activities is so small that your YEL income does not exceed the YEL lower limit or if you are drawing an old-age pension under the earnings-related pension acts. Read more about self-employment while on a pension.
If you do work for a public sector employee (municipality, state or church) as an entrepreneur and the YEL insurance conditions are not met, the work is insured by the local government pension institution Keva. Ask more about this from Keva (keva.fi).
Retroactive YEL insurance
If you take out the insurance retroactively, it should take effect from the date when the insured work began. You pay YEL contributions for the period when the insurance is in force. For example, if your entrepreneurship under YEL begins in January, you have six months to take out insurance retroactively, with effect from January.
It is possible to take out YEL insurance retroactively for the current and the three preceding calendar years. For periods prior to that, you cannot accrue pension. If you take out YEL pension with retroactive effect, you should remember that you will have to pay the previous YEL contributions all at once. That is why we recommend that you take out the insurance with immediate effect when the obligation to insure commences.
The legal form of your company and your ownership share in the company have an impact on whether you need to have YEL insurance. You need to take out YEL insurance when you are
You need to take out YEL insurance when you are
- a private self-employed person, i.e. a sole trader, or a family member working for a sole trader without being paid a salary
- a partner in a general partnership
- a responsible partner in a limited partnership
- a partner in an executive position in a limited liability company, who holds alone more than 30 per cent or, together with family members, holds more than 50 per cent of the company’s shares or votes.
Do I need YEL insurance if I’m a freelancer?
For the purposes of YEL insurance, you are considered an entrepreneur if you work as a freelancer without a private or public sector employment contract. In that case, you are responsible for your pension cover just like other entrepreneurs. However, if your work as a freelancer has the characteristics of an employment relationship, i.e. you have signed an employment contract, you are paid for your work and your employer supervises and manages your work, you are an employee. As a freelancer, you can also work as a self-employed person and employee at the same time.
Your family member may also need YEL insurance
Your family member who works in your company may need YEL insurance.
Under the Self-Employed Person’s Pensions Act, your family members are:
- your spouse or registered partner, even if you live at different addresses
- your common-law spouse if you live in the same household
- your children and parents who live in the same household with you and their spouses
- your adoptive children and adoptive parents.
Your siblings are not your family members, even if they live in the same household with you and pursue entrepreneurial activities together with you.
What happens if I forget to take out YEL insurance in time?
If you do not take out insurance in time, i.e. within six months of the start of your obligation to insure, the Finnish Centre for Pensions (ETK) will urge you to take out insurance or will take it out on your behalf. In that case, you may need to pay a penalty for non-payment in addition to the regular YEL contribution. The State Treasury will determine the penalty for non-payment. We will send you a separate invoice for the penalty for non-payment after receiving the non-payment decision from the State Treasury.