Private sector insurance contributions under the Employees Pensions Act and the Seafarer’s Pensions Act

The average contribution of wage earners under the Employees Pensions Act in 2020 is 22.7 per cent. This includes the temporary reduction as of 1 May 2020, the average client bonus of 0.7 per cent and the average reductions for administrative costs, the costs for contribution losses and statutory fees.

The average contribution under the Seafarer’s Pensions Act is 19.0 per cent of the paid wages in 2020.

The 2020 contributions under the Employees Pensions Act take into account the competitiveness pact of the social partners.

The average employer’s share under the Employees Pensions Act is 15.25 per cent of wages in 2020. The contribution of an employer that has signed an insurance contract varies depending on the size of the employer and on the number of disability pensions it has granted to its employees. Smaller employers pay a flat-rate contribution.

Contributions of private sector employer with an insurance contract

Employers who have full-time employees or who, over a period of six months, have paid out wages to a minimum amount of 8,676 euros (in 2020) are employers with an insurance contract. Such employers must sign an insurance contract with a pension provider of their own choice.

The total contribution of an employer with an insurance contract with an earnings-related pension provider is 25.3 per cent of the wages in 2020 during the period 1 January – 30 April 2020 and 22.7 per cent during the period 1 May – 31 December 2020.  The management cost share of the contribution and the contribution loss share, both of which depend on the size of the employer, are deducted from the total basic contribution rate. The final contribution rate is also affected by the client bonuses paid by the pension insurance companies.

The worker’s share of the total contribution is 7.15 percentage points (workers aged under 53 years or over 63) or 8.65 percentage points (workers aged 53-62 years).

If the wage sum paid by the employer to the employees two years ago (in 2018) exceeds 2.0865 million euros, the size of the contribution is also affected by the number of disability pensions granted to the employer’s own employees. The disability component of the contribution has been described in more detail on the website “Determining the contribution level in different fields” (link below).

The insurance contribution takes the form of a subsidy in industry-wide pension funds and company pension funds.

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TyEL contribution of occasional employers

An occasional employer is an employer who does not continually employ any employees, and whose wages paid out to employees under temporary contracts over a period of six months do not exceed a combined sum of 8,676 euros (in 2020).

The TyEL contribution for occasional employers is the same as that for employers with an insurance contract. Occassional employers do not have the right to client bonuses so the paid insurance contribution is final.

MEL contribution

In 2020, the average contribution under the Seafarer’s Pensions Act is 19.0 per cent of the paid wages.

The worker’s share of the total contribution is 7.15 percentage points (workers aged under 53 years or over 63) or 8.65 percentage points (workers aged 53-62 years).

The employer’s share of the contribution is 11.4 per cent of the wage sum in 2020.

As under the Employees Pensions Act, the employer’s contribution for large employers that take out insurance under the Seafarer’s Pensions Act depends on the number of disability pensions it has granted to its employees (via the deductible).

Slightly less than one third of the MEL pension expenditure is financed from the state budget. MEL insurance is administered by the Seafarer’s Pension Fund.

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