Business owner shocked by YEL income proposal

Sarianne Reinikkala strongly criticizes her pension insurance provider’s actions.

The pension providers are currently revising business owners’ incomes for YEL purposes, also known as YEL incomes. This year, pension providers are revising YEL incomes greater than €25,000 among business owners who have held a YEL policy for at least three years and have not made any significant changes to their YEL incomes in that time. There are around 64,000 such business owners.

Sarianne Reinikkala from Helsinki, the owner of Finncontainers Oy, is one of them. She did not jump for joy when she received the proposal; her YEL income and YEL contributions rose significantly.

Previously, Reinikkala paid YEL contributions of around €10,000 annually. The proposal from her pension provider would have seen her paying €28,000 annually from May.

“A hike of 180% like this is pretty drastic,” the business owner says.

Reinikkala’s YEL income was last revised just under ten years ago. Since then, her YEL income has been increased automatically every year.

“My YEL income has been set in line with a substitute’s salary. That’s what the law, which hasn’t changed at all, says. That salary is still at around the same level. That’s why I don’t think there are any grounds for this increase.”

“I didn’t even get an email, nor did anyone ring me.”

Sarianne Reinikkala, business owner

Three options

Reinikkala is surprised by how her pension provider contacted her regarding the YEL income increase.

“I got a text message telling me I had a couple of weeks to make a decision. A week later I got a second message saying I had to act immediately. It had the tone of a scam message. I didn’t even get an email, nor did anyone ring me.”

She logged on to her pension provider’s website to check. There, three options awaited her.

“I had to think about whether I’d accept the awful proposal, which would bleed the company dry every year, or an increase split into two €4,000 parts, the second of which would kick in three years down the road.”

Under the 2023 amendments to the Entrepreneur’s Pension Act, a pension provider can raise YEL income by €4,000 in one go during a review round, provided the business owner’s YEL policy was in force when the amendment entered into force.

The third option that Reinikkala was offered was the opportunity not to approve the proposal, in which case she was expected to supply her own figure.

“I chose that. I criticized the increase based on turnover. We have a large turnover because our products are expensive.”

At the same time, Reinikkala submitted an estimate of a substitute’s pay, which is still at the same level as during the last review ten years ago. “I asked them to call me, but so far, at least, I’ve heard nothing.”

Harri Hellstén, Labour Market Affairs Manager at Suomen Yrittäjät, the Finnish SME association, says that the proposals from pension providers are based on a company’s turnover data and the median salary level in the industry.

“A YEL income decision made in accordance with legislation must be based on information about the business owner’s labour input and the value of it. There’s no way of deciding what they are, based on the company’s turnover alone.

When reviewing YEL incomes, Hellstén says, the statutory response time is two weeks from when the business owner is presumed to have received the proposal.

“However, not reacting does not mean that the business owner completely loses their opportunity to present a differing view of the pension provider’s decision,” he says.

“Our company has a strong balance sheet, but many business owners could be uncertain about how they’ll manage in the future.”

Sarianne Reinikkala, business owner

“Many people could be shocked”

Reinikkala wants to share her experience so other business owners can be prepared for their YEL income reviews.

“When something like this hits you and you have so little time to react, many people could be shocked. Our company has a strong balance sheet, but many business owners could be uncertain about how they’ll manage in the future. I’d like to know the role increased YEL incomes play in things like the higher numbers of businesses closing down and going bankrupt. I’d like to tell everyone that acting like this isn’t OK and that business owners don’t need to just take it lying down,” Reinikkala says. She has made provisions for her own pension and social security in other ways in addition to YEL insurance alone.

“I don’t have to rely solely on YEL. I’ve taken out insurance and made investments. The older generations have shown me that that’s worth doing. I’ll give new business owners the same advice if the pension providers don’t start putting YEL contributions into funds.”

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