YEL income reviews to begin soon in earnest

The pension providers will begin an extensive review of YEL incomes in September and October. An expert explains what this means.

This autumn, large-scale reviews of YEL incomes in accordance with the amended Entrepreneur’s Pension Act will begin.

Yrittajat.fi asked the pension provider Elo how the reviews are progressing. The company’s communications department says that it approached around 2,000 business owners before the summer holiday period. However, it will step up reviews to full steam in September and October.

“We haven’t received very much feedback so far, but the response we have got indicates that our process is working well all round,” Päivi Sikkilä of insurance services at Elo says.

Sikkilä says that business owners have questions about what YEL income is based on and by the level at which YEL income should be set.

Elo is contacting its customers by letter and email. After that, the business owner has the opportunity to react to the proposal within two weeks.

Business owner’s voices to be heard

Labour Market Affairs Manager Harri Hellstén of Suomen Yrittäjät, the Finnish SME association, explains the basis for setting YEL income.

“YEL income should match the value of the business owner’s labour input. A metric of this is the salary that would be paid to an equally qualified third party for the same work. If the YEL income was at the statutory level before the Act was amended, the pension provider will not change it following its review, as long as the labour input or its value has not changed.”

When doing the reviews, the pension providers use a YEL income calculation service, developed by them jointly, as an aid. However, this calculator is just an aid each pension provider uses to assess YEL incomes. It is based on each sector’s average turnover and salary data.

“The figure the calculator gives is not a statutory YEL income. It is merely the starting point for a conversation. In addition, when a pension provider fixes a YEL income, it must consider all the factors that play into the business owner’s labour input and its value,” Hellstén of Suomen Yrittäjät says.

This is how much YEL income can be raised

As a business owner, you should read your pension provider’s review of your YEL income carefully. If you do not consider the value of your labour input to correspond to the new figure after the review, you may present your own view of the value of your labour input, issues that support that view, and key business figures. When making its final decision, the pension provider must consider all the information it has received about the value of the business owner’s labour input. It must evaluate how important this information is in setting the YEL income.

After the pension provider contacts the business owner with a proposed new YEL income, the business owner has two weeks to react.

If the business owner does not react, the pension provider can fix a new YEL income for the business owner in line with the recommendation. This will come into force from the start of the second month following the dispatch of the YEL income recommendation.

In the first and second review round, YEL income can be raised by a maximum of €4,000. This is how much a pension provider can raise a YEL income without a business owner’s consent if there are clear grounds for raising the YEL income.

In terms of YEL premiums, an increase of YEL income of €4,000 means an increase of around €80 per month.

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