Sole trader and YEL insurance
As a sole trader you take care of your own pension cover. You take care of it by taking out a self-employed person’s pension insurance, i.e. YEL insurance. It will enable you to accrue pension and gain financial security against the loss of your job or your ability to work. The insurance is statutory, i.e. mandatory.
YEL insurance for a sole trader
You are an entrepreneur when you work as a sole trader or are otherwise self-employed. In that case, take out self-employed person’s pension insurance, i.e. YEL insurance. The insurance determines what kind of pension cover and other social security you will have. That is why the insurance is statutory, i.e. mandatory.
YEL insurance accrues the pension that will be paid to you when the time comes. In addition, it secures your and your family’s income if you lose your job or your ability to work. Read more about social security for the self-employed.
Your YEL insurance contributions are fully tax-deductible. Make the deduction in your personal, your company’s or your spouse’s taxation.
When to take out YEL insurance
Take out YEL insurance when the following five conditions are met:
- 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.
- Your entrepreneurial activities last at least four months.
- Your YEL income is at least EUR 8,575.45 per year (in 2023) or EUR 9,010.28 per year (in 2024).
- You work in your company.
- You live in Finland.
Example: Seppo works as a sole trader. His common-law spouse who lives in the same household assists Seppo in running his business. Seppo and his common-law spouse do not have children together. Seppo pays his common-law spouse a salary for her work. Seppo and his common-law spouse will be insured under YEL if the other conditions for YEL insurance are met.
If your family member works in your company, he or she might also need YEL insurance. The table shows examples of how your family members should be insured.
| Company form | Situation | YEL or TyEL |
|---|---|---|
| Sole trader | Your child works in your company, lives with you in the same househould and does not get payment |
YEL |
| Sole trader | Your child works in your company, lives with you in the same househould and gets payment |
TyEL |
| Sole trader | Your spouse works in your company, which you fully own, gets payment |
YEL |
| Sole trader | Your common-law spouse works in your company, which you fully own, gets payment/does not get payment | YEL |
Who are an entrepreneur’s family members?
According to YEL, 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.
From a YEL insurance perspective, your siblings are not your family members, even if they live in the same household with you and pursue entrepreneurial activities together with you.