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See examples of how YEL income will be calculated in future

We calculated how the income stated for YEL purposes, “YEL income”, is determined in five different sectors.

The reform to the YEL system has prompted discussion about whether YEL contributions will rise in future if Parliament passes the Bill into law.

Pension providers have a clear answer.

“No big change is being planned to the definition of YEL income. So, YEL income will be defined in future in the same way as now, but that definition will be refined,” Heta Virkki, customer service manager at pension provider Elo says.

Suomen Yrittäjät cooperated with Elo to calculate how the YEL incomes for five different sectors are determined at present and what kind of social security and pension policyholders would be entitled to on that basis. Virkki says that the determination of YEL income would largely continue to apply after the YEL reform.

“The sample calculations are relevant after the reform comes in, too. For a pension provider, the most important thing is to ensure that a business owner’s YEL income is at the right level. In that, we will be helped by a shared YEL income calculator which is being drawn up for the occupational pensions sector, which will tell us a YEL income based on the wage level of the sector. The change in the law will not change the fact that a business owner’s personal situation can affect the level of YEL income. There will be room for discretion in future, too,” Virkki says.

A pension provider uses information about the level of wages in the sector and the extent of the business as a basis for its YEL calculations.

Virkki says that if the reform is enacted, it will not cause significant changes to the YEL incomes of people currently running their own businesses.

“If pension providers are given oversight responsibility, and a business owner’s YEL income differs from what it should be, we will consult the business owner and ensure that his or her YEL income is at the right level.”

Read more about YEL here. Suomen Yrittäjät held an information session about the YEL reform. Read eight questions and answers from the session here.

“Small impact on small business owners”

If the average wages in the business’s sector were €30,000, but the business had a turnover of €20,000, Virkki does not think that a pension provider would set a higher YEL income than the business’s turnover.

“The definition of YEL income will not change in any case: it will merely be refined. The same things will affect that determination as now,” Virkki says.

A business owner will continue to have the opportunity to affect the level of his or her YEL income in future. Even if reference is made to the wage levels of different professions, Virkki says that would not mean the pension provider would propose a higher level of YEL income than the business owner currently pays.

“The business owners who may see their YEL income change are those whose work in their business is clearly their primary occupation with high, established turnover and who have underinsured themselves at the wrong level over the longer term. There is clearly going to be less impact on small business owners whose turnover is otherwise moderate.”

“The definition of YEL income will not change in any case. The same things will affect that determination as now.”

Heta Virkki, customer service manager, Elo

You can read more about the YEL reform here and here.

How YEL income is determined in different sectors

In these sample calculations, the business owner was born on 1 August 1992 and has not accrued any pension to date, meaning the person has never earned wages in a job. Age does not affect the level of social welfare benefits.

The calculations assume that the business owner’s earning will stay the same until retirement. Usually, earnings rise over a person’s career, meaning more pension is accrued. The calculations were done in cooperation with an expert from pension provider Elo.

The pension estimations were calculated on the 2022 level, that is, without index increases. The estimation is based on current legislation and takes the life expectancy coefficient effect into account. The calculations were made based on 2022 figures. 

The YEL income recommendations come from the sectoral YEL income guide currently used by the Finnish Centre for Pensions. The new entrepreneur discount has been considered in the estimated premiums.

Physiotherapist (full time)

According to the YEL income guide of the Finnish Centre for Pensions, a physiotherapy business owner’s YEL income is determined based on experience, specialist skills, business entity and extent of business activities. The wages in the sector under the collective agreement, including a four-year service bonus, are used as the average basis for evaluating YEL income. The minimal YEL income for a physiotherapy business owner operating alone and full-time is evaluated at €30,700 a year. 

Turnover: €70,000

YEL income: €27,000

YEL premium: 

€5,076/year

€423/month

Estimated social welfare payments:

Sickness benefit: €63/weekday

Accident benefit: €75/day

Earnings-linked unemployment benefit: €66/workday

Basic unemployment benefit: €35/workday

Parental allowance: €63/weekday

Estimated pension:

€1,125/month (lowest pension age)

€1,313/month (highest pension age)

Beautician (part-time)

The YEL income of a full-time beautician is estimated at €15,600–31,200 a year. The level of YEL income is affected by the location of the salon, the city, and the number of specialized treatments offered. According to the YEL income guide of the Finnish Centre for Pensions, this estimate is primarily for the minimum YEL income of a beautician who does not employ any staff.

YEL income: €10,000

YEL premium: 

€1,881/year

€157/month

Estimated social welfare payments:

Sickness benefit: €30/weekday

Accident benefit: €28/day

Earnings-linked unemployment benefit: €0/workday

Basic unemployment benefit: €0/workday

Parental allowance: €30/weekday

Estimated pension:

€417/month (lowest pension age)

€486/month (highest pension age)

Barber, sole trader (full-time)

The YEL income is estimated based on the number of professional staff.

YEL income: €23,000

YEL premium: 

€4,325/year

€360/month

Estimated social welfare payments:

Sickness benefit: €54/weekday

Accident benefit: €64/day

Earnings-linked unemployment benefit: €59/workday

Basic unemployment benefit: €35/workday

Parental allowance: €54/weekday

Estimated pension:

€958/month (lowest pension age)

€1,119/month (highest pension age)

Restaurateur (full-time)

The entrepreneur’s YEL income is based on the average earnings level of supervisors working regular hours in the hotel and catering sector. Most restaurants are small 1–3 person businesses with an annual turnover of under €0.3 million. 

Annual sales: Under €200,000

YEL income: €20,000

YEL premium: 

€3,761/year

€313/month

Estimated social welfare payments:

Sickness benefit: €47/weekday

Accident benefit: €56/day

Earnings-linked unemployment benefit: €54/workday

Basic unemployment benefit: €35/workday

Parental allowance: €47/weekday

Estimated pension:

€833/month (lowest pension age)

€973/month (highest pension age)

Electrician (full-time)

The business owner’s YEL income in an electrical business varies depending on the structure of the turnover. Business owners whose business is focused on retail sales have the lowest YEL income. If the business is engaged in other electrical design operations “to a significant extent” in addition to its other operations, the YEL income guide of the Finnish Centre for Pensions says the YEL income should be increased by 30 per cent.

Turnover: €150,000

YEL income: €31,300

YEL premium: 

€5,886/year

€490/month

Estimated social welfare payments:

Sickness benefit: €73/weekday

Accident benefit: €87/day

Earnings-linked unemployment benefit: €74/workday

Basic unemployment benefit: €35/workday

Parental allowance: €73/weekday

Estimated pension:

€1,304/month (lowest pension age)

€1,522/month (highest pension age)

Taxi driver (full-time)

According to the Finnish Centre for Pensions, an entrepreneur taxi driver’s YEL income can be defined with reference to the salaries set out in the sector’s collective agreement. In this case, the taxi driver’s minimum YEL income comes to €24,800 annually. This figure is based on the collective agreement as of 1 February 2018.

Annual working hours: 2,000–2,200 (entrepreneur’s own statement)

YEL income: €24,800

YEL premium: 

€4,663/year

€389/month

Estimated social welfare payments:

Sickness benefit: €58/weekday

Accident benefit: €69/day

Earnings-linked unemployment benefit: €62/workday

Basic unemployment benefit: €35/workday

Parental allowance: €58/weekday

Estimated pension:

€1,033/month (lowest pension age)

€1,206/month (highest pension age)

Source: Elo YEL calculator

Updated on 11 August. Passage about determination of YEL income amended.

Pauli Reinikainen