Long-awaited YEL report published

SY says the rapporteur’s YEL report cannot serve as a basis for further legislative preparation.

(Want to learn more about the planned changes to the entrepreneur’s pensions system? Watch a video of our webinar from 11 Dec. 2025 with English subtitles here. Select “subtitles” and “English” in the Vimeo settings.)

Rapporteur Jukka Rantala has submitted his report on reforming the Entrepreneur’s Pensions Act (YEL) to Minister of Social Security Sanni Grahn-Laasonen (NCP).

Suomen Yrittäjät, the Finnish SME association, thanks Rantala for his wide-ranging analysis but does not believe this YEL report can be used as the foundation for further preparation.

“The proposals in the report would lead to widespread increases in entrepreneurs’ pension contributions – amounting to hundreds of millions of euros – and would make entrepreneurship more difficult,” says Mikael Pentikäinen, CEO of Suomen Yrittäjät.

“Minister Grahn-Laasonen’s conclusion on the impacts of Rantala’s proposal is correct. The proposal would not strengthen entrepreneurship,” Pentikäinen says.

More freedom of choice

Suomen Yrittäjät wants to increase business owners’ freedom to decide on their own pension and social security above the mandatory YEL insurance threshold.

“The threshold for mandatory insurance must be raised to improve the position of business owners who are often under financial pressure and running small businesses. The current YEL income calculator, which often produces arbitrary proposals, should be scrapped. Dividends must not be used to calculate YEL contributions, and business owners must have the freedom to choose how they determine the value of their labour input,” Pentikäinen says.

Suomen Yrittäjät proposes that above the mandatory threshold, business owners should be able to choose whether their insurance is based on the current YEL income model or on an “actual income model”, in which the level of pension contributions would be determined, for example, by data from the Incomes Register.

“Business owners’ situations vary, which is why the system must be flexible. The YEL income model works for many, but in its current form it does not work for everyone,” Pentikäinen says.

Suomen Yrittäjät maintains that dividends must not be used in any way as a basis for YEL contributions, as they represent returns on capital. For both employees and business owners alike, pensions must be based on the value of labour input.

“We thank Minister Grahn-Laasonen for her clear position – dividends should not be used as a basis for YEL contributions,” says Atte Rytkönen-Sandberg, a vice president at Suomen Yrittäjät.

Rantala’s report

In his YEL report, Jukka Rantala proposes a general rule of using taxable earned income as the basis for YEL income.
In certain situations, business owners would have the option of a calculated YEL income, determined using the same principles as at present, once the defined YEL income exceeded €35,000 per year.
Rantala proposes the possibility of switching to the general-rule model as soon as the legislation enters into force, with business owners able to continue under the current YEL income model for up to two more years. If YEL income exceeds €70,000, the current model could be retained after the transition period. The same would apply to business owners whose YEL income rises above the threshold during the transition period.
The current YEL income assessment calculator would be developed into a labour-input indicator, intended to measure the value of a business owner’s labour input more accurately than at present.
During the transition period, business owners could retain their current YEL income or, subject to certain restrictions, switch to the YEL income defined under the general-rule model.
Rantala also proposes lowering the mandatory insurance threshold to set the income limit at €2,520 per year.
In addition, the report analyses various ways of introducing pre-funding into business owners’ pensions at a general level.
You can read the whole report here.

“Impact assessments are inadequate”

Suomen Yrittäjät demanded that the review process thoroughly identify the problems in the current system as well as alternative and credible improvement proposals for addressing them, along with impact assessments.

“The impact assessments are inadequate. The report does not contain any assessment of behavioural effects outside the pension system,” says Rytkönen-Sandberg of Suomen Yrittäjät.

“The entrepreneurs’ pension system needs reform that strengthens the conditions for business ownership rather than weakening them.”

Rytkönen-Sandberg would also do away with the YEL income calculator.

“The YEL income calculator used by pension providers, which often produces arbitrary proposals, should be abolished, or at the very least replaced with a new tool for determining YEL income.”

Rantala’s report also presents options for initiating funding within the YEL system.

“In the long term, introducing pre-funding into the YEL system is an important way to reduce the state’s share of business owners’ pensions. Work to map out the different options must continue. In addition, improving the efficiency of the pension system is a key way to reduce pension contributions and shrink the deficit in the business owners’ pension system,” Rytkönen-Sandberg says.

At the publication event, Minister Grahn-Laasonen said the entrepreneurs’ pension system needs fixes. However, she ruled out reforms that would increase pension contributions for middle-income employee business owners, in particular. She also ruled out linking dividends to pension contributions.

The minister promised business owners would be consulted during the preparation process.

“We will launch a business owner dialogue before Christmas and listen to business owners broadly.”

The minister’s earlier remarks

On Tue. 2 Dec., Minister of Social Security Sanni Grahn-Laasonen (NCP) told Helsingin Sanomat that the opportunity for low-income and new business owners to determine their YEL contributions on the basis of actual income was under preparation. However, she said it was impossible to move directly to a fully earnings-based model. She also said that it is impossible to find a solution that would completely satisfy all parties.

The model presented by the minister to HS would reduce YEL contributions for the lowest-income and new business owners. Grahn-Laasonen said at Friday’s publication event that she has requested calculations on the matter. The reform would also cost the state money, which she says limits who could be granted greater choice.

“Increasing pension contributions must not hamper enterprise. Current business owners are not to blame for the growing state contributions. The reasons are the lack of pre-funding and an ageing population,” the minister said.

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Toimitus

toimitus@yrittajat.fi