Limited company and YEL insurance

Are you working as an entrepreneur in a limited liability company? Are you working in an executive position? In that case, you usually need to take out self-employed person’s pension insurance, i.e. YEL insurance. If you have several companies, one YEL insurance policy covers all your business activities.

Insuring a shareholder in a limited company

YEL insurance is always personal, not company-specific. You can thus have several companies, but you only need one YEL insurance which takes into account all your entrepreneurial activities.

As a shareholder in a limited company, you need to take out YEL insurance if the general conditions for insurance are met and your work and holding in the company meet the criteria described below.

When to take out YEL insurance

Take out YEL insurance when the following five conditions are met:

  1. 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.
  1. Your entrepreneurial activities have lasted at least four months.  
  2. Your YEL income is at least equal to the lower YEL limit, i.e. EUR 8,063.57 per year (in 2021).
  3. You work in your company.
  4. You live in Finland.

If your company is a limited company, the following two  conditions must also be met:

  1. You work in your company in an executive position.
  2. You hold
    • more than 30% of the share capital or voting rights carried by the shares alone or
    • more than 50% of the share capital or voting rights carried by the shares together with your family members. In addition, you must hold at least one share in the company you work in.

When calculating ownership shares, indirect holdings and holdings through other corporations and groups are also taken into account. More information on indirect holdings and their impact on YEL insurance can be found on the earnings-related pension act service website.

Example: Pirjo and Sanna are in a registered partnership and work in a limited company that runs a hardware store. Pirjo is the CEO and owns 1 per cent of the company’s shares. Sanna is the Chair of the Board and owns 75% of the company’s shares. The rest of the shares are owned by a third party. Both Pirjo and Sanna must take out YEL insurance because they own more than 50 per cent of the shares in the company together and work in the company.

When are you in an executive position?

You are considered to work in a executive position if, for example, you are

  • a managing director
  • a member of the board of directors
  • an administrative or business director
  • an authorised signatory
  • a person who owns all the company shares or has actual controlling interest in the company.

You are also in an executive position when you work in your company and actually control its operations, even if you do not hold a formal executive position.

Who are an entrepreneur’s family members?

When you work in an executive position in a limited company, your family members under YEL 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.

From a YEL insurance perspective, your siblings are not your family members, even if they live with you in the same household and pursue entrepreneurial activities together with you.