Insurance provision for expatriate employment – pension cover from finland or from abroad?

Employers insure their employees and self-employed persons insure themselves – also outside Finland’s borders. When your earnings-related pension insurance matters are in order, you also accrue pension for work carried out abroad.

The country in which you arrange pension cover depends on two things: the duration of the employment relationship and the country of employment. This page contains basic information about insurance provision for expatriate employment. For more information, call our customer service at tel. +358 010 195 000.

Duration of the employment relationship – posted or non-posted?

Posted employee or posted self-employed person refers to a person working abroad temporarily. A posted employee must have an employment relationship with a Finnish employer during the entire period of working abroad, and a self-employed person must ensure that their activities in Finland are in order so that they can continue them upon their return. The work of a posted employee abroad is thus always temporary.

The pension cover of a posted employee or self-employed person can sometimes be provided in Finland, sometimes in the country in which he or she works. This depends on whether the country is:

  • an EU/EEA country or Switzerland
  • a social security agreement country
  • a country with which Finland has no social security agreement.

Non-posted employee or non-posted self-employed person refers to a person working abroad on a permanent basis, in which case their pension cover is also usually provided in the country in which they work.

When in Rome – apply for pension from Finland or the country of employment

Pension accrues according to the practices in place in the country in which you have pension cover. However, the right place for you to apply for pension is often Finland. When your pension cover is retained in Finland, you take out TyEL insurance for your employees and YEL insurance for yourself. If the pension cover transfers to the country of employment, you, as an employer, insure your employees; and as a self-employed person, you insure yourself, in accordance with the practices in place in the country of employment.

Sometimes, however, pension cover is provided in both Finland and the country of employment. This is the case almost always when the country of employment is a country with which Finland has no social security agreement. In this case, the employee or self-employed person must be insured in both countries. Pension cover goes hand in hand with other social security benefits, and that is why employees and employers are usually covered by the social security system of the country in which they have pension cover. However, other social security benefits are not provided automatically; they must be applied for.

Within Europe’s borders, mobility of workforce is made easy, as the EU and EEA countries and Switzerland comply with the harmonised EU regulation. An employee or self-employed person that has been posted abroad must apply for a certificate, after which they are entitled to pension cover and other social security benefits in Finland for two years.

If you work abroad for more than two years, you must apply for an exemption. The exemption guarantees that your pension and social security cover will be retained in Finland for a maximum of five years. If your work abroad lasts longer than five years, your pension and other social security cover will transfer to the country of employment; in this case, you must follow the practices in place in the country of employment.

Working abroad for less than a month is often considered a business trip, in which case no certificate is required. This should be looked into on a case-by-case basis. Sometimes a certificate is required even for short periods of work abroad.

(EU countries are Austria, Belgium, Bulgaria, Croatia, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the UK. EEA countries are Norway, Iceland and Liechtenstein.)

To make arranging pension and other social security cover easy also outside Europe, Finland has concluded a social security agreement with eight countries and one province. The contents of these agreements vary by country, but they have in common that they allow for an employee to retain his or her pension cover in Finland for 3–5 years. A self-employed person’s pension cover, on the other hand, can immediately transfer to the country of employment.

To guarantee that the pension cover is retained in Finland, the employee must apply for a certificate of posting. The same certificate is also used to apply for the retention of your other social security benefits in Finland, provided that this is permitted under the social security agreement concluded with the country of employment. If your work abroad lasts longer than indicated in the social security agreement, you must apply for an exemption, which guarantees that your pension cover and social security cover will be retained in Finland for five years at maximum. If your work abroad lasts longer than five years, your pension and other social security cover will transfer to the country of employment; in this case, you must follow the practices in place in the country of employment. 

Working abroad for less than a month is considered a business trip, in which case a certificate is not necessarily required. However, this should be looked into on a case-by-case basis, as sometimes a certificate is required even for short periods of work abroad.

(The social security agreement countries are the United States, Canada, Quebec, Israel, Chile, Australia, India, China and Korea.)

When posting your employee to a non-agreement country, keep his or her TyEL insurance in force. As a result, your employee will retain his or her right to pension cover in Finland as long as his or her employment relationship with a Finnish employer remains in force, regardless of the duration of posting. On the other hand, your employee’s right to other social security benefits will be automatically retained in Finland for only one year. If you wish for the right to be retained longer, both the employer and the employee must fill in Kela’s form (Y38), in which case the right to other social security benefits can be retained in Finland during work abroad, for a maximum of 10 years.

If you are self-employed, your pension cover will be retained in Finland for a year, provided that you keep your YEL insurance in force and, in addition,

  • you take out YEL insurance at least 4 months before going abroad
  • you have worked as a self-employed person in Finland for at least 4 months before going abroad
  • your or your company’s domicile is in Finland
  • you intend to return to Finland.

If you fail to meet one of the above-mentioned conditions, arrange your pension cover in the country of employment immediately at the start of your work abroad. If you wish to retain your right to other social security benefits in Finland, submit a notification to Kela.

(Non-agreement countries are, for example, Russia and all countries other than social security agreement countries, EU or EEA countries and Switzerland.)

Pensionable earnings means a salary that your employee would earn for similar work in Finland. Usually, the pensionable earnings are based on the pay that the employee receives before being posted abroad, and it forms the basis for both TyEL contributions and pension accrual for work abroad.

Starting on 1 January 2019, the pensionable earnings must be reported to the Incomes Register. The employer’s and employee’s social security contributions are paid based on the pensionable earnings. The pensionable earnings can be reported monthly, by the fifth day of the calendar month following the work.

The payer must provide the Tax Administration with the necessary complementary details on working abroad.

The pension that you have earned from working abroad is always paid to you to Finland – except if you worked in a non-agreement country. All countries of employment do not pay pensions outside their national borders; this is why you should find out about the practices in place in the country of employment before leaving Finland. It is also advisable to find out beforehand about the taxation of work performed abroad. You can read more on the subject on the Tax Administration’s website.

When you apply for pension, apply for it either from Finland or from the country of employment, depending on where you are living when applying for pension and in which country you worked.

1. If you live in Finland or another EU or EEA country, Switzerland or a social security agreement country:

  • Apply for pension from your country of residence if you apply for pension for work carried out in an EU or EEA country, Switzerland or a social security agreement country.
  • Apply for pension from your country of employment if you apply for pension for work carried out in a non-agreement country.

2. If you live in a non-agreement country:

  • Apply for pension from Finland if you apply for pension for work carried out in Finland.
  • Apply for pension in accordance with the rules in place in your country of residence if you apply for pension for work carried out in another country.

When applying for pension for work carried out abroad from Finland, fill in a normal Finnish pension application. Attach a U form to your application to provide information about your work abroad. Also attach any possible certificates for work performed abroad and send the application with its attachments to the Finnish Centre for Pensions or to us at Ilmarinen. We will apply for the pension from abroad on your behalf.

When transferring to the country of employment, your employee’s pension cover may weaken. In that case, you can supplement the pension cover with voluntary TyEL insurance.

You can take out voluntary TyEL insurance when you cannot insure your employee under the regular i.e. statutory TyEL insurance and when your employee is covered by Finnish social security when taking out insurance. Examples of situations where an employee cannot be insured under the statutory TyEL insurance include cases where an employee’s employment relationship with a Finnish posting company ends and he or she transfers to a local contract, or where an employee transfers to a foreign company or a Finnish subsidiary or sister company.

The contributions for the voluntary TyEL insurance are based on the pensionable earnings just as in the case of regular TyEL insurance. Voluntary TyEL contributions are also paid by both the employer and the employee. As an employer, you collect your employee’s share of the contribution from his or her pay and then remit it to us as usual.

When you wish to take out voluntary TyEL insurance or discuss it, please call our customer service at tel. +358 10 195 000.