Recent study on self-employed persons’ pension
insurance:
Self-employed persons’ pensions lag behind those of wage earners
The self-employed person’s pension clearly lags behind the wage earner’s
pension. In relation to their income level, self-employed persons are
underinsured and take out too small YEL insurance policies for themselves. These
are the conclusions of the study Onko yrittäjien eläkevakuuttaminen kohdallaan?
of the Finnish Centre for Pensions.
Insurance under the Self-Employed Persons’ Pensions Act (yrittäjien eläkelaki
YEL) is statutory, as is pension insurance for employees, but the self-employed
person may himself affect the level of pension provision. The study of the
Finnish Centre for Pensions investigates the differences between pension
provision arranged by the self-employed person and the earned income that is the
basis for the taxation.
Earned income means the income that the tax authorities have considered as
the person’s income from salaried work or self-employment. The amount of the YEL
income does not have to correspond to the self-employed person’s taxable income.
According to the instructions for determining the self-employed person’s YEL
income by the Finnish Centre for Pensions, the YEL income should correspond to
the wage payable to a person who replaces the self-employed person.
“The level of YEL insurance is about one-third lower than the self-employed
person’s earnings would indicate”, says Raili Hyrkkänen,
researcher at the Finnish Centre for Pensions.
The study also investigates whether the pension insurance policy taken out by
the self-employed person corresponds to the instructions of the Finnish Centre
for Pensions for the determining of the earned income of self-employed persons
in different professions. The aim of the instructions is that the basis for the
self-employed person’s insurance would correspond to the average wage in the
relevant industry, but the self-employed persons’ earned incomes are lower than
the average wage in the relevant industry.
The study further indicates that a low confirmed YEL income weakens the
self-employed person’s social security. The YEL income affects the self-employed
person’s social security benefits, such as sickness allowance and
earnings-related unemployment allowance, or the self-employed person’s
entitlement to a part-time pension.
Onko yrittäjien eläkevakuuttaminen kohdallaan?
Raili Hyrkkänen, Discussion Papers 2009:2, Finnish Centre for
Pensions >>
THE CONFIRMED YEL INCOME SHOULD CORRESPOND TO THE WAGE THAT WOULD BE PAYABLE
IF AN EQUALLY SKILLED PERSON WERE HIRED TO REPLACE THE SELF-EMPLOYED PERSON.