How Suomen Yrittäjät would reform the pension legislation

In reforming the Entrepreneur’s Pensions Act (YEL), business owners’ freedom must be increased, the threshold for mandatory insurance raised, and dividends kept outside pension contributions. This is the position set out by the Representative Council of Suomen Yrittäjät in its statement.

The Representative Council of Suomen Yrittäjät, the Finnish SME association, adopted its YEL position at its meeting on Tue. 25 Nov. A YEL report commissioned by Minister Sanni Grahn-Laasonen and prepared by rapporteur Jukka Rantala was expected soon after the meeting.

“The YEL minimum threshold must not be lowered, as doing so would sharply increase pension contributions for many small-scale business owners. A significant reduction in the mandatory insurance threshold could raise contributions for nearly 200,000 small business owners and jeopardize the continuity of small-scale enterprise,” said Petri Salminen, Chair of Suomen Yrittäjät.

Suomen Yrittäjät proposes raising the mandatory insurance threshold to make the pension and, in particular, social security during a business owner’s career, higher than basic social security. This would motivate business owners to pay YEL contributions and strengthen confidence in the system. In addition, business owners’ freedom above the mandatory insurance threshold must be increased.

“Business owners need freedom, not more bureaucracy, if businesses are to grow and develop. That is why business owners should have the broadest possible right to decide on their own pension contributions and pension provision above the mandatory insurance threshold,” Salminen said.

Contributions based on the value of labour input

“It’s also important that YEL contributions continue to be based on work performed and the value of labour input. If pension contributions were even partly linked to dividends, it would weaken incentives to grow businesses and invest. Dividends are in principle returns on capital and ownership and must not affect pension contributions – neither for business owners nor for employees,” Salminen says.

Suomen Yrittäjät demands the pension system treat different company forms equally and consider the diversity of entrepreneurship. The current YEL income calculator must be reformed to better reflect the value of a business owner’s work input and not produce proposals perceived as arbitrary.

Suomen Yrittäjät maintains that the pension legislation is extremely important for business owners, as it regulates social security during a business owner’s career and pension security thereafter. Confidence in the YEL system among business owners is weak, which further underlines the need for reform.

Suomen Yrittäjät will host an online YEL information session on Thu. 11 Dec. from 15.30 to 16.30. For more information and to register, click here.

Suomen Yrittäjät’s YEL policy positions

Pension contributions must be based on the value of labour input.

The YEL minimum threshold must be raised.

Business owners’ freedom must be increased.

Different company forms must be treated equally.

The YEL income calculator must be reformed.

The pension system must be made more efficient.

Thorough impact assessments must be carried out.

How Suomen Yrittäjät would reform the pension legislation

Suomen Yrittäjät’s YEL policy positions

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