YEL income as the basis for insurance

A self-employed person’s pension insurance (YEL) is the basis for an entrepreneur’s pension and social security. YEL insurance secures your income when you fall ill, lose your work ability or take parental leave. Your pension, social security benefits and YEL contributions will be calculated based on the YEL income you have estimated.

What is YEL income?

YEL income means your estimate of the monetary value of your work input. YEL income could be described as a price tag that you put on your working hours. YEL income does not mean your taxable income or the salary you pay yourself. YEL income is also not your company’s profit or turnover, and it is not dependent on the profitability of your business.

YEL income is always determined on an annual basis, regardless of when your YEL insurance begins. For example, if you take out YEL insurance so that it takes effect on 1 June 2020, estimate your YEL income for the period 1 June 2020–31 May 2021.

 

How do I estimate my YEL income?

As a self-employed person, you estimate your YEL income yourself. You should set your YEL income at a suitable level so that it corresponds to your work input right from the start, because it is used for calculating your YEL insurance contributions and the pension you accrue from your entrepreneurship. The YEL income also impacts a self-employed person’s social security as it is taken into account when calculating, for example, the sickness allowance, parental allowance and unemployment allowance.

Set your YEL income so that it is at least as much as you would pay an employee with the same professional skills on a yearly basis. In brief: YEL income is the sum of money you would pay to another person for doing your work.

When estimating your YEL income, take into account the number of your working hours, your company’s turnover and the possible seasonality of your business. The YEL income includes all the work you do as an entrepreneur. So you only need one YEL insurance even if you have several companies.

If you need help in estimating your YEL income, try out Ilmarinen’s YEL calculator.

You can estimate your YEL income using the YEL calculator.

Go to the YEL calculator

YEL income lower and upper limit

YEL income has lower and upper limits. The limits change annually in accordance with the wage coefficient confirmed by the Ministry of Social Affairs and Health. If your YEL income is at least equal to the lower YEL income limit, you have the obligation to take out YEL insurance. In 2020, the lower limit is EUR 7,958.99 and the upper limit EUR 180,750. For full-time entrepreneurs, we recommend a YEL income level of at least EUR 20,000–30,000 to ensure a decent level of pension and social security.

Year 2020 € / year
Entrepreneurial activities must be insured if the self-employed person's work
input is valued at more than
7 958,99
The upper limit of YEL income for a self-eployed person is 180 750,00
A self-employed person who is unemployed can collect basic daily allowance from Kela
if his/her YEL income is at least
13 076,00
A Self-employed person can join the unemployment fund if his/her
YEL income is at least
13 076,00
Average YEL income in Finland 22 074,000

When should I change my YEL income?

Change your YEL income if your work as an entrepreneur changes. For example, if you go from being a part-time entrepreneur to a full-time entrepreneur or expand your entrepreneurial activities, increase your YEL income. On the other hand, if you work less in your company than before, decrease your YEL income. Each time you make a change to your YEL income, you change your pension and social security and your YEL insurance contribution.

You cannot change your YEL income retroactively, so it is advisable to react to changes in your entrepreneurial activities right away. Changes other than those concerning your entrepreneurial activities and working, such as receiving larger social benefits, are not grounds for changing your YEL income.

How does YEL income affect my income in various life situations?

The table shows which benefits paid by Kela or other parties your YEL income has an impact on.

Situation Benefit to be applied for Impact of earned income Who pays
You fall ill Daily sickness allowance Your daily sickness allowance is based
on your earned income
Kela
You have a baby Parental allowance The allowance is based on your
earned income
Kela
You lose your ability
to work due to an
accident or illness
Vocational rehabilitation and/or
disability pension
The compensation is based
on your earned income
Employment pension insurance company
You lose your ability
to work or die due to
an accident
Compensation from accident insurance;
daily allowance, rehabilitation,
survivor's pension etc.
The compensation is based on a sum
that is at most equal to your
earned income
Non-life insurance company
You lose your job Basic daily allowance To accumulate the daily allowance, your earned
income must beat least EUR 13,076.00 in 2020
(EUR 12,816.00 in 2019)
Kela
  Labour Market Subsidy A means-tested benefit when you are not entitled
to basic daily allowance
Kela
You lose your job Earnings-related daily allowance To accumulate the daily allowance, your earned
income must be at least EUR 13,076.00 in 2020
(EUR 12,816.00 in 2019)
The Unemployment Fund for Entrepreneurs and the
Self-employed AYT
or the Finnish Unemployment
Fund for Entrepreneurs SYT
You want to work less or
take out part of your pension
Partial early old-age pension The amount is either 25 or 50 percent calculated
from the pension that you have accrued by
the end of the year preceding your retirement
Employment pension
insurance company
You age Old-age pension or years-of-service-
pension (under certain conditions)
The pension is based on your
earned income
Employment pension
insurance company
You die Survivors' pension The pension is based on your
earned income
Employment pension
insurance company

YEL income and a self-employed person’s social security

A self-employed person’s social security benefits such as the sickness allowance, parental allowance and unemployment security, are based on YEL income.

Read more about social security for the self-employed