Clear ‘no’ from business owners to dividends as basis for YEL contributions

Suomen Yrittäjät, the Finnish SME association, proposes that business owners whose incomes exceed the floor for compulsory pension insurance be allowed to determine their pension contributions and social security themselves.

The recent Yrittäjägallup survey found that 83% of business owners agreed.

“This would suit the nature of running your own business and used to be possible in practice,” says Petri Salminen, chair of Suomen Yrittäjät.

At its session on 27 May, the Suomen Yrittäjät Representative Council adopted a position on the YEL entrepreneur’s pension system. Previously, business owners had a large degree of control over their YEL contributions and level of pension security, as the pension providers did not confirm business owners’ YEL incomes in the statutory manner.

The latest Yrittäjägallup survey shows that business owners in all industries and all company sizes strongly support the freedom to set one’s own level of pension security.

In addition, Suomen Yrittäjät proposes increasing the minimum floor for YEL insurance to bring entrepreneurs’ pensions above the basic security level. This proposal gained the support of 53% of survey respondents, with 31% opposing and 16% unable to say.

The survey asked business owners if the floor for YEL pension insurance ought to be raised from the current €9,208 to €15,128, which the is the floor for earnings-related unemployment benefit coverage.

“Such an increase would motivate business owners to pay their YEL contributions and guarantee them at least some value for their pension and social security contributions,” Salminen says.

“The YEL system is vital for business owners, as it covers their social and pension security during their working careers. Our studies show that only six per cent of business owners trust the current YEL system fully. Their trust needs to be bolstered with reforms that encourage enterprise,” Salminen says.

Options must be weighed up carefully

At its midterm review, the Orpo Government adopted two policy stances to reform the YEL system. Firstly, it decided that business owners’ pension contributions would more clearly track their actual incomes from 2029 onwards. Suomen Yrittäjät stresses that defining a business owners’ actual income and distinguishing it from the business’s income is extremely hard.

“This is an unfortunate and hasty policy. Suomen Yrittäjät demands careful consideration of all YEL reform options and that policies only be adopted after such consideration,” Salminen says.

“Suomen Yrittäjät objects to including dividends as a basis for pension contributions, as not even employees’ pensions are determined by income from capital or property, but by salary earnings,” Salminen says.

The second policy the Government adopted at its midterm policy review was to grant business owners who started out after the legislative amendments of 2023 the same €4,000 cap on increases to YEL contributions as were granted to other business owners during their first YEL income reviews in 2026–2028.

“This is an important policy, one our association has been demanding, which will prevent exorbitant rises. Significantly, the increase cap will be extended to all business owners during the proposed period regardless of when they took out their pension policies,” Salminen says.

Suomen Yrittäjät supports the Government Programme’s reference to an investigation into a dedicated entrepreneurs’ pension provider.

“We need action to bolster business owners’ trust in the system and increase ensure more effective management of entrepreneurial pensions and the entire pension system. That is why the issue needs to be carefully studied,” Salminen says.

How the survey was conducted

The Yrittäjägallup entrepreneur survey was carried out by Veriana on behalf of Suomen Yrittäjät.
1,351 SMEs responded to the Yrittäjägallup survey between 6 and 19 May.
The confidence interval for the results is +/- 2.7 percentage points.
You can read the results in more detail here.

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