Suomen Yrittäjät calls for overhaul of entrepreneur pension system

Suomen Yrittäjät proposes broader improvements to the Entrepreneur’s Pension Act. “We hope that the next government boldly and openly conducts a full-scale review of this legislation which is so important for business owners,” Director of labour market affairs Janne Makkula of Suomen Yrittäjät says.

Suomen Yrittäjät, the Finnish SME association, proposes reform of the entrepreneur pension (YEL) system. The association says that the goal should be to improve business owners’ social security and trust in the YEL system as well as increasing entrepreneurs’ flexibility and freedom.

On Monday 27 February, Suomen Yrittäjät published its programme for improving business owners’ social security.

Last autumn, the Finnish Parliament amended the Entrepreneur’s Pension Act. The amendment highlighted the importance of a judgement in the round when defining YEL income.

The rather moderate amendments made to the Entrepreneur’s Pension Act improved business owners’ standing compared to previous regulations.

“Based on a proposal from Suomen Yrittäjät in the autumn, Parliament adopted a resolution according to which the Government ought to investigate the needs for reforming the Entrepreneur’s Pension Act more broadly. The next government must take this into account and take the required steps,” Janne Makkula, a Vice President at Suomen Yrittäjät, says.

“The lower limit for obligatory pension insurance coverage under the Entrepreneur’s Pension Act should be increased from the current level to at least the lower level for a business owner’s earnings-linked unemployment security. When assessing whether a business owner meets the obligation to take out pension coverage, an evaluation of a business owner’s labour contribution must be the focus,” Harri Hellstén, Labour Market Affairs Manager at Suomen Yrittäjät says.

Simultaneous income security from self-employment and conventional employment

Suomen Yrittäjät says that the rules for considering when someone is an entrepreneur and when in they are an employee should be combined so they accrue benefits from various forms of work.

“Our social insurance now widely recognizes that people switch between work as entrepreneurs and as employees and enables them to accrue benefits when they do so. The exception to this is unemployment security, which does not allow people to accrue benefits from simultaneous or alternating stints in self-employment and conventional employment,” Hellstén says.

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Suomen Yrittäjät also proposes a transition in unemployment benefit to a general or universal benefit and a single benefit-payer model. 

“The right to unemployment security should be held by every person in work, not just someone who pays into an unemployment fund. This is a big question of fairness,” Makkula says. 

Proposals by Suomen Yrittäjät for reform of social security

1. Overhaul the Entrepreneur’s Pension Act.
2. Combine the rules for considering when someone has been in employment so benefits are accrued from various forms of employment.
3. Exempt business owners from paying health insurance contributions on their own salaries.
4. Harmonize the conditions for determining when a business owner’s family member has been at work with the conditions of other employees.
5. Set real income as the grounds for a business owner’s housing support.

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