YEL contributions and invoice matters

As a self-employed person, you pay your YEL insurance contributions yourself. The more you pay, the better your pension and social security will be.

Your YEL contributions will be calculated based on your YEL income

YEL insurance is statutory, which is why the YEL insurance contribution is the same in all employment pension insurance companies. The contribution is a certain percentage of your YEL income. The percentage is confirmed annually by the Ministry of Social Affairs and Health.

Insurance contribution percentages for 2020

The following table indicates the insurance contribution percentages for 2020, new entrepreneurs’ insurance contribution percentages and the pension accrual percentages.

Age Pension accumulation, % of earnings in 2020 YEL contribution, % of YEL income in 2020 YEL contributio of a new self-employed person, % of YEL income in 2020
Under 53 1,5 24,1 18,798
53-62 1,7 25,6 19,968
Minimum 63 1,5 24,1 18,798

 

What affects the size of the YEL contribution?

The size of your YEL insurance contribution is affected by four factors: your YEL income, the insurance contribution percentage, the instalment months and whether you work as an entrepreneur for the first time.

YEL income

YEL income is your estimate of the value of your work input.

Insurance contribution percentage

The insurance contribution percentage is determined based on age. See more detailed information in the table above.

Instalment months

The instalment months you select will impact the size of your YEL contribution. This means that the contribution will be either credited or debited with interest according to whether your payments focus on the early or late part of the year. The most advantageous option is to pay the contributions in a single instalment in January. However, at least half of the contributions must fall due before August.

Use the YEL calculator to calculate the impact of the instalment months on your YEL contribution >

Change the instalment months in the online service in the section ’Insurance information’ >

Reduction for new entrepreneurs

When you become self-employed for the first time, you will benefit from a reduction for new entrepreneurs in your YEL contribution for the first 48 months. The reduction is 22 per cent of the YEL contribution.

Read more about the reduction for new entrepreneurs >

You can deduct the YEL contributions in taxation

YEL contributions are fully tax-deductible. You can deduct the YEL contributions in your personal or your spouse’s taxation or in your company’s taxation. Fill in the tax return according to the tax authority’s instructions. We will automatically report your YEL income to the tax authority. Be sure to report the YEL contributions you have paid to the tax authority.

If the YEL contribution payer changes

If the YEL contribution payer changes (e.g. the company starts paying the contributions or the company form changes from a sole trader business to a limited company), please update the information about the new payer immediately once the change takes effect. We do not receive the new payer information automatically; the entrepreneur must inform us him- or herself. To make the change, go to ’My YEL contact details’ in our online service.

You can get a pdf copy of your YEL invoice and see the status of your paid and unpaid contributions in the contribution list in the self-employed person’s online service.

Read about our online service

Change the contribution temporarily using the YEL contribution flexibility option

Under specific conditions, you can pay your insurance contributions flexibly without changing your YEL income, if your financial situations necessitates it.

If you use the YEL contribution flexibility option, you will also change your pension security. However, your other social security benefits, such as the daily allowances paid by Kela, do not change, as they will still be calculated based on your confirmed YEL income.

Using the YEL contribution flexibility option, you can accrue more pension by paying higher YEL contributions (10–100%) or reduce your YEL contribution temporarily (10–20%). You can pay higher insurance contributions every year, but lowering the insurance contributions is only possible a maximum of three times in a seven-year period.

You can use the YEL contribution flexibility option if

  • your insurance is in force for the entire calendar year with the same earnings-related pension insurance company
  • you do not have any outstanding YEL contribution payments
  • you do not receive the reduction for new entrepreneurs
  • you do not draw a pension under the earnings-related pension acts (including part-time pension and partial old-age pension).

 

What benefit do I get from paying YEL contributions?

By paying YEL insurance contributions, you accrue your future pension. At the same time, you secure your right to various social benefits. Your estimated YEL income impacts the following benefits:

  • old-age pension, disability pension and partial old-age pension (earnings-related pension company)
  • sickness allowance (Kela)
  • maternity allowance, special maternity allowance, paternity allowance, parental allowance and partial parental allowance (Kela)
  • special care allowance (Kela)
  • rehabilitation allowance (earnings-related pension company)
  • eligibility for earnings-related unemployment allowance (unemployment fund for entrepreneurs)
  • survivors’ pension paid to the family on the entrepreneur’s death (earnings-related pension company)