Pension contributions of the self-employed
The earnings-related pension contribution for self-employed persons is calculated as a per cent of their insured confirmed income from self-employment.
|2019||Self-employed person’s basic contribution rate, %|
|under 53 and 63 or more||53-62|
|Self-employed Persons’ Pensions Act (YEL)||24.10||25.60|
|Farmers’ Pensions Act (MYEL)||24.10||25.60|
The self-employed pay 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 years. Other self-employed persons pay contributions according to the lower contribution rate (see table above).
The total contribution income equals roughly 23.1 per cent of the self-employed person’s confirmed income from self-employment. The total contribution income is reduced by the discount for newly self-employed persons.
Newly self-employed persons get 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 the newly self-employed is roughly 18.8 or 20.0 per cent of their insured income from self-employment.
The self-employed have to take out their insurance on their own and pay the insurance contribution to a pension provider of their own choice.
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.
|2019||Self-employed person’s contribution, %|
|under 53 and 63 or more||53-62 years|
|For annual earnings less than €27,322.93||13.0140||13.8240|
|For annual earnings between €27,322.93 – 42,936.11||rising on a sliding scale||rising on a sliding scale|
|for annual earnings higher than €42,936.11||24.10||25.60|
The average contribution rate for those insured under MYEL in 2019 is 13.8 per cent for farmers and 13.4 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 2019, the State is responsible for around 22 per cent of the pension expenditure under YEL. The corresponding replacement rate for the MYEL pension expenditure was 83 per cent in 2019. The state covers the share of pensions paid under the pension acts for the self-employed that the collected insurance contributions do not cover.