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.
What is YEL income?
The YEL income should correspond to the monetary value of your work input. 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 your insurance begins on 1 March 2021, your YEL income is estimated and confirmed for the period 1 March 2021 – 28 February 2022.
Seasonal entrepreneur’s YEL income
If you work as an entrepreneur on a seasonal basis, i.e. for part of the year, you need to have YEL insurance if the same seasonal activities continue annually and the other YEL insurance conditions are met. Keep your YEL insurance in force continuously and year-round. Estimate your YEL income based on the amount of work during your work months. If, for example, you work five months during the year, your YEL income is equal to the value of your work input during these months.
How is YEL income estimated and confirmed?
When you take out YEL insurance, we will confirm your annual YEL income that corresponds to your work input. When confirming the YEL income, we will take into account the information you have provided on your entrepreneurial activities and your estimate of your YEL income.
The YEL income is used as the basis for calculating the pension that you accrue from your entrepreneurship and your YEL insurance contribution. The allowances paid by Kela, such as the sickness and parental allowances, are also calculated based on your confirmed YEL income. In addition, the YEL income determines the level of your unemployment security.
Your YEL income should, at minimum, correspond to a salary that would be paid to a person with the same professional skills on an annual 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.
Also take a look at the Finnish Centre for Pensions’ YEL income guide (tyoelakelakipalvelu.fi).
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 2021, the lower limit is EUR 8,063.57 and the upper limit EUR 183,125.
| Year 2021 | € / year |
|---|---|
| Entrepreneurial activities must be insured if the self-employed person's work input is valued at more than |
8,063.57 |
| The upper limit of YEL income for a self-eployed person is | 183,125.00 |
| A self-employed person who is unemployed can collect basic daily allowance from Kela if his/her YEL income is at least |
13,247.00 |
| A Self-employed person can join the unemployment fund if his/her YEL income is at least |
13,247.00 |
When should I change my YEL income?
Your YEL income can be changed as required if your work as an entrepreneur changes. Your YEL income will be increased, for example, when your entrepreneurial activity expands or your part-time entrepreneurial activities turn into full-time self-employment. Similarly, the YEL income can be reduced if your work input decreases.
You cannot change your YEL income retroactively, so it is advisable to react to changes in your entrepreneurial activities right away. You can apply for a change in your YEL income in our online service, after which we will confirm for you a YEL income corresponding to your annual work input. 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 13,247.00 in 2021 |
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 13,247.00 in 2021 |
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 |
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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 -
YEL income and a self-employed person’s pension
The size of the YEL income affects a self-employed person’s pension amount.
Read more about self-employed person’s pension