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.
