FAQs on YEL insurance
Are you about to start a business? The insurance under the Self-employed Persons’ Pensions Act (YEL insurance) is an important part of your social security. Check out our answers to frequently asked questions about pensions for the self-employed.
Question: I am about to start my own business – do I have to take out YEL insurance?
Answer: You have to take out YEL insurance if you meet all of the following criteria:
- you are between 18 and 69 years old (for those born in 1957 or earlier, the insurance obligation ends at age 68, for those born between 1958 and 1961, the insurance obligation ends at age 69, for those born in 1962 or later, the insurance obligation ends at age 70),
- you have been self-employed for at least four months,
- you live in Finland,
- your earned income from self-employment is at least 8 575,45 euros (in 2023), and
- you work in your company.
You have to take out insurance even if you aren’t a Finnish citizen and even if you have taken out voluntary pension insurance.
If you are self-employed and come to work in Finland from abroad, you have to take out YEL insurance for your self-employment in Finland if you meet the criteria for the insurance.
You have to take out YEL insurance if you work as a self-employed person in Finland and live either in Finland or in another EU country. Similarly, if you come to work in Finland from a country outside the EU and you meet the criteria listed above, you have to take out YEL insurance.
You may not have to take out YEL insurance for your self-employment if the EU Regulation on social security or the rules of social security agreements so say.
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Question: As a newly self-employed person, I’m not familiar with all the terminology. What is ‘YEL income’?
Answer: The YEL income (also referred to as your ‘confirmed income‘) is the value of your work input, that is, the work you do. It roughly equals the amount an outsider would be paid in wages for doing your work. Your YEL income forms the basis for your insurance contributions and other social benefits you apply for.
Estimate your YEL income at an annual level, even if you started your business in the middle of the year. How your company performs does not affect how you value your YEL income.
There is a lower and an upper limit (in 2023 amounts) to the YEL income:
- lower limit: 8 575,45 euros
- upper limit: 194 750,00 euros.
Both limits are adjusted each year with an index. When your YEL income is higher than the lower limit, you have to take out YEL insurance.
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Question: Does my YEL income affect my social security?
Answer: Yes. Your YEL insurance gives you an income when
- you are old, or
- you develop a disability.
Your YEL insurance will also provide for your family in case you die.
Your pension amount is calculated based on your YEL income.
Your YEL income also affects the amounts of the following social benefits you may get:
- the sickness allowance,
- the parental allowance, and
- the unemployment allowance.
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Question: I have worked as a self-employed person for a while now. As of when do I have to take out YEL insurance?
Answer: Take out YEL insurance within the first six months of your self-employment. The insurance will cover your self-employment from the beginning of your self-employment.
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Question: I’m self-employed on the side. I have insurance and will get a pension for my main job. Do I have to take out YEL insurance for the self-employment I do on the side?
Answer: Yes, even if you’re self-employed on the side, you have to take out YEL insurance if you meet the criteria for the insurance.
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Question: I’m running a kiosk three months per year. Do I have to take out YEL insurance?
Answer: Yes, if your seasonal self-employment continues from year to year and you meet the other criteria for the insurance, you have to take out YEL insurance.
The YEL insurance is continuous and valid all year round.
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Question: I’m a partner in a limited company in which I work. Do I need YEL insurance?
Answer: You must take out YEL insurance if your self-employment meets the criteria for YEL insurance and you
- work in a senior position in the company, and
- own (directly or via in intermediary company) more than 30% of the company shares or the voting rights based on those shares, or
- own together with family members (directly or via an intermediary company) more than 50% of the company shares or the voting rights based on those shares.
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Question: I am a partner in a limited partnership. Do I need YEL insurance?
Answer: Yes, you must take out YEL insurance if
- you work in the company, and
- you meet the other criteria for taking out YEL insurance.
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Question: I am an active partner in a limited partnership. Do I need YEL insurance?
Answer: Yes, you must take out YEL insurance if
- you work in the company, and
- you meet the other criteria for taking out YEL insurance.
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Question: I carry on a trade. Do I need to take out YEL insurance?
Answer: Yes, you must take out insurance if you meet the criteria for taking out YEL insurance.
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Question: My spouse works in my company but is not paid for the work. Do I need to take out insurance for my spouse?
Answer: Yes, you need to take out YEL insurance for your spouse when they:
- work in the company,
- have split earnings in taxation, and
- meet the other requirements for taking out YEL insurance.
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Question: I work as a self-employed person in several companies. Do I have to take out several YEL insurance policies?
Answer: No, taking out one YEL insurance policy is enough. You should set your YEL income to cover your work input in all companies that you work in.
Question: I use an invoicing service platform. Do I have to take out YEL insurance?
Answer: As a rule, and from the point of view of the earnings-related pension insurance acts, persons who use invoicing service platforms are self-employed persons. Their obligation to take out insurance is determined by YEL. A self-employed person using invoicing service platforms must take out YEL insurance if the criteria for the insurance are met. The criteria are that the self-employment is not totally random, and the value of the work input exceeds the limit set in the law (€8 575,45/year in 2023). The value of the work input is indicated by the size of the invoicing. It is also possible that the worker is in an employment relationship with the ordering party, even if the wage is paid via an invoicing service platform. If the work is done in an employment relationship, the employer is under obligation to take out pension insurance under the Employees Pensions Act (TyEL).
Check with your pension provider or the Finnish Centre for Pensions if you are unsure about how your work should be insured.
Question: I have worked as a self-employed person for the public sector. My self-employment has been minor and my work input doesn’t reach the lower YEL income level. The public sector asks why I don’t have YEL insurance and has informed me that it will insure me under JuEL even if I work as a self-employed person. Can I get a certificate from the Finnish Centre for Pensions that states that I don’t have to take out YEL insurance?
Answer: The Finnish Centre for Pensions doesn’t issue such certificates. But if your work income is below the lower YEL income level, you don’t have to take out YEL insurance.
Keva insures your self-employment under the Public Sector Pensions Act (JuEL) when you don’t have YEL insurance. In addition, you may not work in the name of a company or other corporation. You’re insured under JuEL even when your work income is so low that you don’t need YEL insurance.
Question: I’m retired but I also work as a self-employed person. Do I have to take out YEL insurance?
Answer: No, you don’t. You can take out YEL insurance voluntarily if you work as a self-employed person while drawing an old-age pension.
Question: Where can I take out YEL insurance?
Answer: You can take out YEL insurance with any earnings-related pension insurance company or any industry-wide pension fund that manages pension insurance for the self-employed.
Pension insurance companies: Elo, Ilmarinen, Varma, Veritas
Industry-wide pension funds: Apteekkien eläkekassa, Eläkekassa Verso
Industry-wide pension funds are limited in the sense that they can only insure people from certain fields of business.
Question: How much is the YEL insurance contributions?
Answer: The insurance contributrions are confirmed annually by the Ministry of Social Affairs and Health.
Question: I am a newly self-employed person and am about to take out YEL insurance. Will I get a reduction on the contribution?
Answer: Yes, if your self-employment has begun on 1 January 2013 or later, you will get a 22% reduction on your pension contribution.
You have the right to a reduced contribution for the initial 48 months of your self-employment. If your self-employment lasts for less than 48 months, you can get the reduction for the remaining months in a second period of self-employment. When calculating the reduction period, any periods of self-employment you have had that have begun in 2001 or later are taken into consideration.
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Question: I can’t pay the total YEL contribution at once. Can I make a payment arrangement?
Answer: Contact the pension provider that has sent you the invoice and discuss a possible payment arrangement with them.
Question: Can I deduct may YEL contribution payments in my taxation?
Answer: Yes, you can deduct the YEL contributions in your taxation. The payer of the contributions is either you or your company. Deduct all your YEL contributions either from your private or your business taxation.
If you pay the YEL contributions yourself, you can deduct them from your own or your spouse’s taxation. If your company pays the contributions, deduct them as part of your company’s expenses.