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The definition for partial ownership is changed when computing the recommended confirmed income under the Self-employed Persons’ Pensions Act (YEL) for a self-employed person. In the future, the turnover is considered only for those companies where the self-employed person has a significant holding.

The Self-employed Persons’ Pensions Act was reformed at the beginning of 2023. The definition of the confirmed YEL income was specified, and the pension providers began checking the confirmed YEL income on a regular basis. At the same time, pension providers introduced a confirmed income computing service developed within the earnings-related pension industry.

The service is a tool that harmonizes and makes it easier to set the confirmed YEL income. The service offers a recommendation for the confirmed income based on register data. The self-employed can also provide additional information, such as the amount of their own work input or the extent of their business activities, which the pension provider considers when estimating the self-employed person’s confirmed YEL income. The pension provider makes an overall estimation of the confirmed income based on available data.

The computing service is based on the median wage of full-time, private sector employees who work in the same industry as the self-employed person. To assess the scope of the self-employment, the calculator also uses the self-employed person’s turnover data relative to that of other companies in the same industry.

Some turnover data have needed to be corrected

The functioning of the computing service is monitored as part of the follow-up of the legal reform. According to investigations, the recommended confirmed YEL income offered by the computing service has sometimes taken turnover data into account of companies in which the self-employed person has no holdings but in which they function in a leading position such as Board member.

For example, a self-employed person has YEL insurance that has been checked. The self-employed person also operates in another company, but solely as a Member of the company’s Board of Directors. Yet the turnover of this other company has been considered when computing the self-employed person’s recommended confirmed YEL income”, explains Lawyer Anniina Alaluusua-Listola (Finnish Centre for Pensions).

For the main part, no problems with the recommended confirmed YEL income

The pension industry further develops the computing service in co-ooperation with Tax Administration so that the computing service will limit itself to only such companies in which the self-employed person has a significant holding. This will be done already in the data set for 2024.

The confirmed income checks for 2023 are almost done and, according to the pension providers, they have gone well for the most part. The self-employed have been able to provide additional information on their work input if the recommended confirmed YEL income has not been at an appropriate level. It has been possible to raise the confirmed YEL income by a maximum of 4,000 euros. In addition, the self-employed can use the regular appeal proceedings.

Finnish Centre for Pensions – Central body of and expert on statutory earnings-related pensions