YEL Insurance Premium

In accordance with the Self-employed Persons' Pensions Act (YEL), entrepreneurs are obligated to take out a pension insurance.

The oligation to take out YEL insurance applies to the following types of entrepreneurs and their family members:

In addition, the entrepreneur must fulfil the following requirements:

The duty to insure starts at the beginning of the month subsequent to the month during which the person reaches the age of 18, and continues until the end of the month during which the entrepreneur reaches the age of 68. The entrepreneur may, without restrictions, continue operating as an entrepreneur concurrently with the YEL old age pension or early old age pension without having to pay YEL premiums. In this case the work performed as an entrepreneur does not contribute to the overall pension accrual. The entrepreneur may, however, take out a voluntary YEL insurance, in which case the pension is accrued by 1.5 % of the YEL work income.

If, however, the entrepreneur receives an old age pension or early old age pension that does not include any YEL pension accrued during an entrepreneurial period, the work performed as an entrepreneur is to be insured under YEL, and accrue the pension by 1.5 % of the YEL work income. Work performed as an entrepreneur concurrently with a full or partial disability pension is to be insured under YEL, provided the preconditions for taking out the insurance are fulfilled in all other respects.

The characteristics of a YEL entrepreneur include

YEL insurance must be taken out within six months of starting any business operations within the scope of YEL. The Central Pension Security Institute supervises the pension cover of entrepreneurs and is entitled to take out YEL insurance on behalf of, and at the expense of, an entrepreneur who has neglected his/her obligation. The Institute may take out retroactive insurance for the current year and the preceding three years.

The insurance premium can be doubled for the duration of the default.

YEL insurance is taken out through a pension insurance company.

YEL Insurance Premium

YEL insurance is based on confirmed work income. 2011 the YEL insurance premium is 21,6 percent of confirmed work income, if the entrepreneur is under 53 years old. If the entrepreneur is older than 53 years the premium is 22,9 percent.

The work income of an entrepreneur is defined in accordance with instructions issued by the Central Pension Security Institute. The YEL work income must match the entrepreneur's contribution to the business - that is, the salary that should be paid to an employee with equivalent skills - and the quality and extent of the business operations. Only in exceptional conditions may the work income be less than the salary of an employee.

An entrepreneur's work income is also important with regard to other social security benefits. It affects, for example, the daily allowances from sickness insurance and the entrepreneur's unemployment cover.

The premiums fall due for payment in the agreed months, with at least half of the due dates before August. The due date for the insurance premium and the last interest-free payment date is the 20th day of the agreed month. If this is a Saturday or public holiday, the last interest-free payment date is the immediate next banking day. Recovery proceedings for any delayed insurance premiums can be initiated without any judgement or decision.

The so-called flexibility rule allows the entrepreneur to pay a higher contribution to improve his/her pension accrual without a permanent increase in the confirmed work income.

Insurance Premium for a New Entrepreneur

Regardless of age, anyone starting as an entrepreneur for the first time can receive a 25 % discount from full YEL premiums for the first 48 months of operating as an entrepreneur. In 2011 the YEL insurance premium is in this case 16.20 % for persons under the age of 53, and 17.18 % thereafter. If the operations last for less than 48 months, the remaining discount period can be used during any other period of entrepreneur operations in the future. There is no time limit between such periods.

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