Revised YEL reform heading to Parliament in October

The Government led by Petteri Orpo (NCP) announced at the close of its final budget session that it would submit the proposal as an urgent matter.

Minister of Social Security Karoliina Partanen (NCP) then clarified the timeline in an interview with Uutissuomalainen, confirming that the YEL proposal would be submitted to Parliament in October.

Under the draft Government Bill, which was circulated for consultation in the summer, business owners would in future be able to choose whether to base their pension insurance on the current YEL income model or on their actual, taxable earned income. The most recently confirmed tax assessment would be used to provide the earned income figure.

Proposal revised

Suomen Yrittäjät, the Finnish SME association, and many other stakeholders have criticized the fact that the earned-income model would be based on past income – in some cases up to two years old. Minister Partanen says the Government has now revised the proposal to use more recent income data for at least some business owners.

“We received feedback during the consultation round saying that form the entrepreneur’s perspective, the pension contribution is not based on current enough income. We have improved this, and we are now moving in the direction that entrepreneurs have hoped for,” Partanen told Uutissuomalainen.

The minister explained that the revised proposal would use data from the Incomes Register for limited-liability companies, meaning pension contributions would be determined on the basis of income from the previous year.

“It is essential that as this model is taken forward, the most up-to-date information possible is used when insuring earned income, to the extent that that’s feasible,” Atte Rytkönen-Sandberg, a Vice President at Suomen Yrittäjät, says.

Sole traders left out

The revision does not yet help sole traders, as their income data does not appear in the Incomes Register.

The Government has previously announced that, in continuation of the YEL reform, it will launch preparations aimed at bringing all entrepreneurs into the scope of the Incomes Register and the Positive Credit Register. The absence of sole traders from the Positive Credit Register has, among other things, made it harder for sole traders to access credit.

“The intention is good, but there is a significant risk of it considerably increasing the administrative burden and costs for sole traders. In practice, bringing sole traders into the Incomes Register is extremely challenging. If this is taken forward, it must be done without making entrepreneurship more difficult,” Rytkönen-Sandberg says.

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