YEL income reviews begin for thousands of business owners

This year, 67,000 business owners will have their YEL incomes reviewed.

The Government is beginning further drafting of the reform of the Entrepreneur’s Pension Act it presented at the April budgetary talks. A Government Bill on the reform is expected by June at the latest.

At the same time, YEL income reviews will continue under the current YEL model until the reform enters into force. The target date for entry into force is the beginning of 2028.

“While the new legislation is being drafted and before or if it enters into force at the beginning of 2028, the current rules will apply as normal. The pension insurer reviews YEL income every three years. If a review falls within this period, the pension insurer will make its decision under the current regulation. Pension insurers are subject to the maximum increase limit until the end of 2028. It is €4,000 per review, not per year,” said Harri Hellstén, Labour Market Affairs Manager at Suomen Yrittäjät, the Finnish SME association, at a YEL webinar organized by the association last week.

67,000 business owners subject to review

Pension insurers will review the YEL income of 67,000 business owners this year. Reviews are now beginning and will continue until the end of the year. In 2026, the reviews apply to business owners whose YEL income was last reviewed, or whose YEL insurance entered into force, in 2023.

Regular reviews of YEL income began in 2023. The legislative reform that entered into force at the start of 2023 requires pension insurance companies to reassess business owners’ YEL income every three years. That means that for some business owners, this is their second review.

The 2023 entrepreneur pension or YEL reform affected YEL policies that existed when the law entered into force. The transition period was sharply criticized by business owners with YEL policies which entered into force on or after 1 Jan. 2023.

Two weeks’ time

This year, YEL income reviews also begin for business owners who took out insurance in 2023. As a result of advocacy work by Suomen Yrittäjät, the Finnish SME association, the €4,000 maximum increase will also apply to them.

For example, pension provider Elo says it will send a preliminary notice by email in May to customers who, based on current information, are due for a review. After that, the pension provider will send a YEL income proposal by email or letter. The business owner will then have two weeks to respond by either accepting the proposal or making a reasoned proposal for a different YEL income.

Calculator updated

The calculator used in connection with YEL income reviews has attracted extensive criticism from business owners. In some cases, business owners have even received what they consider arbitrary YEL income proposals, as turnover has been used as a benchmark when assessing the scale of their business activity.

The Finnish Centre for Pensions has now updated the calculator. From the start of 2026, it caps the recommended YEL income at no more than 60% of a business owner’s turnover. The Centre said the change is based on experience gained and “supports the accuracy of YEL income, particularly in small-scale business activity”.

Until the turn of the year, the calculator limited the recommendation to prevent it from exceeding the business owner’s turnover.

Government’s YEL reform

From 2028, business owners could choose whether to base their pension contributions on taxable earned income from their business activities or the current calculated YEL income. After the transition period, however, YEL income would in future have to be at least 50% of the business owner’s taxable earned income.

Pure earned income, excluding items such as dividend income treated as earned income, would be the definition of business owners’ earned income.

Between 2028 and 2032, the 50% minimum requirement for YEL income will enter into force in stages, starting at 30% and rising by five percentage points each year until it reaches 50% of taxable earned income. The transitional provision will increase the annual cost of the model in 2028–2032.

In addition, the current YEL model’s maximum increase limit of €4,000 in YEL income reviews would still apply in 2028.

Business owners would be allowed to suspend YEL insurance while receiving sickness allowance, and the current payment flexibility would be increased to 25%. Payment flexibility would replace the current discount for new business owners.

Based on 2033 levels, the Finnish Centre for Pensions and the Ministry of Finance estimate that compared with the current model, contributions would fall for nearly 40% of business owners, remain unchanged for more than 40% and rise for 20%.

The lower threshold for mandatory insurance is expected to remain unchanged.

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Toimitus

toimitus@yrittajat.fi