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Entrepreneur’s Pension Act amended at start of year: Read about key changes here
Amendments to the Entrepreneur’s Pension Act (YEL) entered into force on 1 January 2023. What is it all about? What is changing and how? How does the reform affect your YEL income?
These are some of the questions that were answered at a Finnish-language webinar organized by Suomen Yrittäjät on Wednesday 18 January.
The speaker at the session was Harri Hellstén, Labour Market Affairs Manager at Suomen Yrittäjät. The information session, was open to all and free, and told both single-person businesses and employers what they need to know about the YEL reform.
You can watch the webinar here and choose English subtitles.
YEL amendment summary
- The amount of an entrepreneur’s pension contributions and social security level are determined in accordance with the value of the entrepreneur’s labour input. When this labour input is evaluated, the hours worked by the entrepreneur and the salary level in the sector must be considered, but also the size of business operations and information provided by the entrepreneur.
- A business’s key financial indicators are also significant when assessing the value of a business owner’s labour input. When the value of a new entrepreneur’s labour input is determined, the fact should be considered that the initial phase of business ownership is not always profitable or solvent, even if the owner works in the business full-time.
- The amendments to the Entrepreneur’s Pension Act stress overall assessment and the role of median salary merely as part of the bigger picture, in which all the available information on a business owner’s professional skill, experience, as well other characteristics and size of the business operations, are considered.
- A business owner can provide this information themselves, and the pension provider must take it into account when setting the YEL income. In addition, the pension provider must provide grounds for its decision, which strengthens a business owner’s legal protection.
- Extending the transition period from three years to six and reducing the maximum pension contribution increase from €8,000 to €4,000 gives business owners even more time to adapt to the change.
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