Entrepreneur shocked by high YEL income proposal

Pension provider proposed business owner Henri Jauhiainen was a YEL income equivalent to the annual salaries paid to his entire staff.

A tourism entrepreneur from Sonkajärvi in North Savo was shocked when his pension provider, Elo, suggested a new YEL income to him.

Henri Jauhiainen received the proposal by email at the end of October.

“I’d been prepared for a realistic YEL income, but the proposal was anything but.”

Jauhiainen’s business in Sonkajärvi, Ruukin tupa, consists of a restaurant-café, cottages and catering and events services. The company was established in 2009.

Elo proposed Jauhiainen a YEL income of €67,000. He considers this proposal unreasonable.

“That would have been equivalent to 25% of my company’s turnover last year and all the wages I paid my staff in 2022. The proposal was completely out of touch with reality.”

Elo proposed Jauhiainen a YEL income of €67,000. He considers this proposal unreasonable.

“A calculator is no substitute for a person”

Jauhiainen says he received three proposals from Elo, of which one was a YEL income of €67,000. The second option was raising his YEL income by €4,000, and the third was providing additional information to the pension provider.

“I decided to accept the €4,000 increase, because it wasn’t possible for me to give further information at that point. I’m ready for the same proposal in the next review round. When that happens, I’ll be ready to provide additional information,” the entrepreneur says.

Jauhiainen concedes having paid too low a YEL income in the past. He thinks that the calculator used to form the YEL income proposals has shortcomings.

“I get that I’d not been paying enough and that my YEL income is now at a better level. The pension providers can’t investigate all possible details. That’s why they have the calculator, which they base their proposals on. However, a calculator is no substitute for a person.”

This autumn, we’ve reported on the defects in the YEL income calculator.

“There ought to be some realism in the calculators. Thankfully, the business owner themselves can influence the proposals,” Jauhiainen says.

Mixed feelings about YEL

Jauhiainen is not the most passionate spokesman for the YEL system.

“I consider it a necessary evil. If I could decide for myself, I’d spend my YEL premiums the way I wanted with a mind to my pension and insuring myself. I’d like to choose a suitable type of insurance.”

At present, Jauhiainen has life insurance, in addition to which he has investments. However, he says that he understands why YEL insurance is an important obligation.

“If the entrepreneur’s pension insurance wasn’t compulsory, many business owners would spend the money on things other than their own social and pension security.”

The most negative aspect of the YEL system in Jauhiainen’s opinion is when an entrepreneur dies in retirement.

“Then the YEL premiums they’ve paid go, in many respects, on insuring other entrepreneurs. In voluntary insurance policies, the funds can be allocated to chosen beneficiaries, such as relatives.”

A YEL policy holder’s next-of-kin are also entitled to a survivor’s pension in certain cases. The pension provider Elo says that a child aged under 20 is always entitled to a survivor’s pension. A spouse and common-law spouse have the right to widow’s or widower’s pension if the conditions are met and, for example, the marriage was concluded before the policy holder turned 65. See here for more information on the survivor’s pension.

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