The State Finances a Large Share of Farmer’s Pensions
The MYEL pension insurance is the earnings-related pension insurance for farming entrepreneurs, covering those who
- live in Finland, in other words farmers, forest property owners, fishermen and reindeer herders,
- work as independent entrepreneurs,
- are between 18 and 67 years of age
- have been self-employed without interruption for at least four months after turning 18, and
- have a MYEL income of at least EUR 3,778.59 per year (2016).
Grant recipients also insure their earned income according to MYEL. The MYEL insurance must be taken out within six months of initializing farming operations that meet the abovementioned criteria.
The basis for the farmer’s insurance is the MYEL income. From this income, the self-employed person’s pensions, compensations and allowances as well as insurance contributions are calculated.
Income from agriculture and forestry consists of the acreage of farmed land and forest, as well as related farming activities possibly carried out at the farm. A farming entrepreneur is insured if the farm comprises cultivated land and forest of at least five MYEL hectares. Income earned from farming is divided between the spouses to the degree that they participate in work at the farm.
There are different regulations governing the income of fishermen and reindeer herders. A fisherman is insured as a self-employed person if he/she is charged tax on the income from fishing. The reindeer herder is insured based on MYEL, if he or she carries out reindeer farming for himself or a reindeer owners’ association.
The Farmers’ Social Insurance Institution (Mela) is responsible for MYEL insurance. In addition to the statutory pension security and accident insurance, Mela also manages other social security and services for farming entrepreneurs.
The State finances the lion’s share of farmer’s pensions
The farming entrepreneurs’ MYEL insurance contribution is determined based on the average TyEL contribution, just like the YEL contribution. However, the contribution is staggered according to earnings from work. The earnings from farming are comparatively low, which is why farming entrepreneurs end up paying significantly smaller insurance contributions than other entrepreneurs. In 2016, the average rate of contribution under MYEL is approximately 13.3 per cent and grant recipients’ rate of contribution approximately 13.2 per cent.
The State finances most of the farmer’s pension since there are over twice as many pension recipients as there are farming entrepreneurs still working, and their insurance contribution income is low. In 2014, the insurance contribution income under MYEL was EUR 191 million. However, the pension expenditure was many times more that, standing at EUR 765 million (excluding special pensions for farmers). In 2016, the State’s share in the pension expenditure will be approximately 78 per cent of the total pension expenditure.
Grant recipients insure their earned income according to MYEL
Insurance of grant recipients’ pension security has been implemented according to the Farmers’ Pensions Act (MyEL) since early 2009.
A grant recipient living in Finland, who has received a grant from Finland in 2009 or later must take out pension insurance if:
- the grant is intended for at least four months of artistic or scientific work in Finland,
- the grant amounts to at least EUR 1,259.53, which corresponds to EUR 3,778.59 (at 2016 price level) in annual earnings, and
- the grant recipient is between 18 and 67 and is not yet receiving an old-age pension.
The insurance obligation applies to those who have received a personal grant as well as to those on a team grant. Grants for undergraduate and postgraduate degrees (Master’s and below) and grants that simply cover costs, such as travel grants, are not included in the scope of the insurance.