SY: Gov’t must immediately begin YEL reform

Suomen Yrittäjät, the Finnish SME association, says the YEL self-employed persons’ pension reform system must become more flexible and reliable.

The Government Programme of Prime Minister Petteri Orpo says the Government will launch an evaluation of the needs for updating the YEL system.

“An evaluation can’t be done in just a few months, so it should be started immediately,” says Janne Makkula,” a Vice President at Suomen Yrittäjät.

The Entrepreneur’s Pension Act was amended at the start of 2023. The transitional period of the amendment is now under way, and this year a second group of self-employed people is receiving proposals from their pension providers for new incomes for YEL purposes, also referred to as YEL incomes. The transitional period of the amendment will run to 2029.

“Before the end of the transitional period, the entrepreneur’s pension system ought to be overhauled. In doing so, the Government should exploit the information gathered during the transitional period following the 2023 amendment, as well as the results of the evaluation of update needs outlined in the Government Programme,” Makkula says.

The Government Programme states the Government will launch an evaluation of the needs for updating the YEL system.

“An evaluation by itself isn’t enough — instead, the end result should be a better and more flexible YEL system which does not create barriers for growth and which is trusted. The evaluation should begin immediately, because when done well it can be the basis for robust legislation,” Makkula says.

All realistic models must be evaluated

“We have long proposed that the basic premise and goal of overhauling the YEL system should be increasing self-employed people’s trust, as well as increasing flexibility and self-employed people’s freedom,” says Harri Hellstén, Labour Market Affairs Manager at Suomen Yrittäjät.

Suomen Yrittäjät says that this goal could be reached if the current mandatory statutory minimum YEL income were increased to at least the level of entrepreneur’s income-related unemployment security.

“Then, business owners who only had basic security would not be forced to pay high pension contributions, and everyone who has to take out some sort of coverage would get benefits that exceed the minimum security,” Hellstén says.

Suomen Yrittäjät says that in the future, an evaluation of the business owner’s labour input could continue to be used to verify whether the person fulfilled their insurance obligation. However, the association also believes business owners above the minimum level should have more freedom to choose their level of security.

In addition, the possibility of including a funding feature in the YEL system should be investigated, as it is the only way to reduce the growing State share in self-employed persons’ pensions.

“When the needs for improving the system are evaluated, we hope that the concrete changes we have proposed and their effects on self-employed people’s security and behaviour are thoroughly considered, with consideration for the effects on taxation and other social welfare. It’s also important to make the same kind of evaluation regarding other proposed improvement options,” Hellstén says.

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