Private sector insurance contributions

Year Pension act Average employer’s contribution, % of gross wage
(incl. employee’s share)
Employee’s share of the contribution, % of gross wage
under 53 years and 63 and above 53-62 years
2018 Employees Pensions Act – employer with
insurance contract
24.4 6.35 7.85
Employees Pensions Act – occasional employer 6.35 7.85
Seafarer’s Pensions Act 20.0 6.35 7.85

The average contribution under the Employees Pensions Act in 2018 includes the average client bonus of 0.5 per cent and the reductions for administrative costs, the costs for contribution losses and statutory fees.It takes into account the competitiveness pact of the social partners.

The average contribution under the Employees Pensions Act of an employer that has signed an insurance contract is 17.75 per cent. It 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 8,346 euros (in 2018) are employers with an insurance contract. Such employers must sign an insurance contract with a pension provider of their own choice.

Year Average employer’s contribution, % of gross wage (incl. employee’s share) Employee’s share of contribution, % of gross wage
under 53 years and 63 and above 53-62 years
2018 25.3 6.35 7.85

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 of 25.3 per cent. The final contribution rate is also affected by the client bonuses paid by the pension insurance companies.

If the wage sum paid by the employer to the employees two years ago (in 2016) exceeds 2.0595 million euros, the size of the contribution is also affected by the number of disability pensions granted to the employer’s own employees.

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

A temporary 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 8,346 euros in 2018.  Temporary employers do not have the right to client bonuses.

Year Average employer’s
contribution, % of gross wage
(incl. employee’s share)
Employee’s share of contribution, % of gross wage
under 53 years and 63 and above 53-62 years
2018 25.3 6.35 7.85

MEL contribution

Year Total contribution,
% of gross wage

Employer’s contribution, % of gross wage

 

Employee’s share of contribution, % of gross wage
under 53 years and 63 and above 53-62 years
2018 20,0 13.2 6.35 7.85

As under the Employees Pensions Act, the employer’s contribution for large employers that take out insurance under the Seafarer’s Pensions Act (MEL) 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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EXPERTS IN THIS AREA: MEERI KESÄLÄ, EEVA POUTIAINEN