How YEL reviews will continue this year

An SY expert says that the criticized YEL income calculator continues to have faults.

The reviews of YEL (entrepreneur’s pension insurance) incomes continue in 2024. Last autumn the pension providers reviewed YEL incomes of less than €15,000. This year business owners whose YEL income is less than €25,000 are being reviewed. The business owners who may be contacted are those who have not significantly changed their YEL income in three years and who have held their YEL policy for at least three years.

In future, too, YEL income cannot be increased by more than €4,000, equivalent to a rise in YEL premiums of around €80 per month. We have previously reported that a significant portion of business owners chose the €4,000 increase to their YEL incomes.

At the start of the year, an index-linked increase was made to existing YEL incomes and the upper and lower limits for taking out YEL insurance. The limits of YEL income are reviewed every year using the ‘salary coefficient’. The lower level for YEL insurance in 2024 is €9,010.28. The lower limit for joining an unemployment fund is €14,803 this year.

“It’s worth remembering that an indexed increase is different to the reviews currently being done,” Harri Hellstén, Labour Market Affairs Manager at Suomen Yrittäjät, the Finnish SME association, points out.

Problems persist in YEL calculator

Some pension providers have already admitted that the calculator they use to help them calculate YEL incomes is defective. Suomen Yrittäjät has also criticized this calculator.

Business owners who have requested the pension providers correct their proposed YEL incomes wanted to adjust the pension providers’ estimated turnover or comment on the number of hours they put in.

“The calculator isn’t capable of considering a business owner’s individual situation. That’s why it’s important for you as a business owner to go over the YEL income proposal you get and request an adjustment, if needed,” Jaana Lehikoinen, Service Manager at pension provider Veritas, commented to Yrittajat.fi in November.

The Finnish Centre for Pensions, which developed the calculator, has admitted that some of the turnover data need to be adjusted. In some cases, the YEL income recommendation given by the calculator also included turnover data for companies where the entrepreneur did not own anything, but merely held a leadership role, such as serving on the board of directors.

The Finnish Centre for Pensions said in October that it is changing its limits for part-ownership to only consider information on turnover for the companies where an entrepreneur owns a significant share.

“It’s good that they’re improving the calculator. The recent changes are aimed at providing better key figures solely for the business operations in which the person is an owner. This is of course an improvement, but still fails to fix the basic problem — you can’t calculate the value of a business owner’s labour contribution directly by using business turnover data or the median salary or turnover data for the sector,” Hellstén says.

Are you a Suomen Yrittäjät member yet? Read about member benefits and advantages