Pension Contributions of the Self-employed

The earnings-related pension contribution of a self-employed person is calculated as a per cent of their insured confirmed income from self-employment.

2018 Self-employed person’s basic contribution rate, %
under 53 yrs and 63 yrs and above 53-62 yrs
 YEL  24.10  25.60
 MYEL 24.10 25.60

Under YEL

A self-employed person pays a higher contribution starting from the first calendar year after they have turned 53 until the end of the calendar year in which they turn 63. Other self-employed persons pay contributions according to the lower contribution rate (see table above).

The total contribution income equals roughly 23.0 per cent of the self-employed person’s income confirmed income from self-employment. The total contribution income is reduced by the discount for newly self-employed persons.

A newly self-employed person gets a 22 per cent discount on the insurance contribution for the first four years of self-employment. That means that the total contribution rate of a newly self-employed is  roughly 18.8 or 20.0 per cent of the insured income from self-employment.

The self-employed have to take out their insurance on their own by paying the insurance contribution to a pension provider of their own choice.

Under MYEL

The MYEL insurance contribution is calculated based on the personal MYEL income of the insured. The contribution rate depends on the insured’s age and amount of income.

2018 Self-employed person’s contribution, %
under 53 and  63 or more 53-62 yrs
For annual earnings less than 26,821.60 euros 13.0140 13.8240
For annual earnings between 26,821.60 and 42,148.29 euros rising on a sliding scale rising on a sliding scale
for annual earnings higher than 42,148.29 euros  24.10  25.60

The average contribution rate for those insured under MYEL in 2018 is estimated at 13.8 per cent for farmers and 13.6 per cent for grant recipients.

Farmers and grant recipients take out pension insurance by paying their pension contribution (which depends on their insured income from self-employment) to Mela.

State’s share of self-employed person’s contributions

In 2018, the state is responsible for approximately 19 per cent of the pension expenditure under YEL. The corresponding replacement rate for the MYEL pension expenditure is 80 per cent. The state covers the share of pensions paid under the pension acts for the Self-employed that the collected insurance contributions do not cover.