The Category Contribution of a Contract Employer
The size of the disability share of a company’s TyEL contribution is affected by, for example, the size of the company. It is determined based on the wage sum of the company’s insured employees over the last two years. When the wage sum exceeds the limit of nearly two million euros, the disability share of the contribution is also affected by the number of disability cases from the last couple of years.
Large companies are divided into contribution categories for the purpose of determining the disability contribution, based on the companies’ own disability pension cases of the last couple of years. There are 11 contribution categories determined for disability risks of different sizes, each with a disability contribution of a different level.
The basis for determining the contribution category is the risk ratio calculated for the party taking out insurance, by which is meant the relation of the funded pension expenditure of new disability pensions to the theoretical disability pension expenditure based on the average TyEL risk. The calculations also take into account partial disability pensions. Vocational rehabilitation support, rehabilitation allowance and other rehabilitation costs are not taken into account when calculating the risk ratio.
A company’s contribution category is determined based on the implemented risk ratio of the last two years. The Ministry of Social Affairs and Health annually confirms the risk ratio limits and contribution category coefficients. The smaller a company’s own pension expenditure for disability pension cases is, the lower the contribution category and the smaller the disability contribution.
Contribution categories are only determined for large employers, and risk ratios needed for their definition are not calculated from periods when the employer was smaller. The TyEL insurance contribution of the employer is a fixed percentage of the wages of the insured, if the wage sum of the employer is lower than two million euros or if the risk ratio of the employer differs by less than 20 per cent from the average disability risk based on TyEL.
A new employer, for whom the wages of insured employees exceeds roughly two million, will pay the basic contribution for the first few years. The contribution category is adjusted annually.