SY calls for continuation of caps on YEL income increases

Ahead of the Government’s mid-term policy review, Suomen Yrittäjät, the Finnish SME association, proposes that a cap be set for increases to incomes for YEL purposes, also known as YEL incomes. SY would like to see such a cap remain in force until the entrepreneur’s pension reform, currently being examined, is instituted. “The threat is that when pension providers review YEL incomes in 2026, new business owners’ YEL incomes could be raised sharply, which could see businesses closing down,” says Harri Hellstén, Labour Market Affairs Manager at Suomen Yrittäjät, says. The Yrittäjägallup survey found that only six per cent of business owners trust the current entrepreneur’s pension system.

SY proposes that the Orpo Government begins preparations of a maximum cap on increases to YEL incomes which can be set when pension providers conduct reviews.

“This would calm the situation until an overall reform of the YEL system is ready. A cap applicable to all business owners would also treat all business owners with YEL insurance equally. The caps under the transitional provisions of the 2023 amendments, which are in force until the end of 2028, only apply to YEL policies which were taken out before the amendments entered into force,” Hellstén says.

The proposed cap would be in force between 2026 and 2030 at least.

Minister of Social Affairs and Health Sanni Grahn-Laasonen (NCP) has appointed a rapporteur to analyse the improvement needs of the entrepreneur pension system.

SY believes that the rapporteur should investigate credible proposals for the system, such as reducing the lower threshold for compulsory YEL insurance and increasing business owners’ freedom when defining YEL incomes, as well as the use and effects of salaries as the basis for YEL incomes.

Pension provider often reduces YEL income proposal

The SY survey found that for 62% of business owners who had responded to the YEL income proposal, the pension provider had reduced its estimate of their YEL income.

The pension providers are currently reviewing this year’s YEL policies, which were in force when the 2023 legislative amendments entered into force.

“Of the respondents who had received a YEL income proposal, seven out of ten said they had responded. Of the respondents, almost half (48%) said they had approved the proposal made by the pension provider,” Hellstén says.

Around one fifth (21%) said they had objected to the proposal and given the pension provider an explanation of their labour input and its value.

Just under a third, 31%, said the pension provider maintained its original view. Five per cent of respondents said their YEL incomes had increased as a result of the process.

Survey: reviews cause financial difficulties for one in two people

One in five respondents said that the recent YEL reform had caused them financial difficulties. When examining the responses from business owners whose YEL income had been reviewed, more than one in two had faced financial difficulties.

“The increases to YEL contributions came during a challenging economic situation, and for some businesses they coincided with the VAT increase. I’m sure that had an effect,” Hellstén says.

Low business owner trust in system

Just six per cent of respondents say they trust the current entrepreneur pension system. The figure has almost halved since the last time the question was asked in August 2022.

Of business owners who have experienced YEL income reviews, one in two completely agrees with the statement that the definition of the YEL income is arbitrary. Only five per cent disagrees partially or completely.

“Distrust and the perception of arbitrariness are to a large extent due to the pension providers’ YEL calculator, which they base their YEL decisions on. The calculator’s result does not provide the value of the business owner’s labour input. Business owners’ responses tell us that the current method of implementing the law cannot go on,” Hellstén says.

The Yrittäjägallup entrepreneur survey was carried out by Veriana on behalf of Suomen Yrittäjät between 12 and 19 Mar. 2025. The survey attracted responses from 1,128 business owners, of whom 890 were insured under YEL. The confidence interval for the results is around three percentage points. Read the results in more detail here.

About the YEL reviews:

• Between 2023 and 2025, each pension provider has been reviewing all YEL policies that where in force when the 2023 amendment entered into force, and evaluating the level of YEL incomes.
• A business owner’s YEL income, part of their YEL policy, is the value of the business owner’s labour input measured monetarily. The YEL income must be equivalent to a salary which you would pay to a third party you hired to do the same work.
• The legislative amendment means that pension providers review YEL incomes every three years. A pension provider may increase YEL income by no more than 4,000 in the first two review rounds if the policy was in force when the legislative amendment entered into force on 1 Jan. 2023.
• You can offset your YEL contributions in full either against your own, your spouse’s or company’s taxes, if the company pays the YEL contribution.
• SY proposes that the Orpo Government, during its mid-term policy review, begins preparations of a maximum cap on increases to YEL incomes which can be set when pension providers conduct reviews, with the caps being in force until 2030 at the earliest.

Further information: Harri Hellstén, Labour Market Affairs Manager, 050 502 0111, harri.hellsten@yrittajat.fi

Corrected 16 Apr. 8.48: The transitional provisions of the 2023 legislative amendment are in force until the end of 2028, not 2029, as previously stated.