Entrepreneurs’ whole social security is determined by the self-employed person’s pension insurance (YEL). In addition to pension, the YEL insurance covers unemployment benefits, health insurance and family benefits. Entrepreneurs’ social security is based on the YEL income confirmed in the YEL insurance.

If you are 18–67 years old, work as a full-time or part-time entrepreneur for a consecutive period of four months or more, and your YEL income exceeds the minimum limit, you are obliged to take out a YEL insurance. The insurance is mandatory to all company forms as well as freelancers and light entrepreneurs without a Business ID, whose entrepreneurial income exceeds the limit.

Kela and entrepreneurs’ unemployment funds use the YEL income as the basis of calculating entrepreneurs’ benefits. However, entrepreneurs can, to a large extent, determine their YEL income level themselves. By paying minimum YEL contributions, you get to use more of your earned income, but it also entails a minimum level of social security.

To recap, the foundation of entrepreneurs’ social security, the self-employed person’s pension insurance YEL, is mandatory and statutory. Entrepreneurs are responsible for their own social security and the accumulation of their pension. They also pay most of their social security contributions out of their own pocket. This is an important point to for entrepreneurs to remember when thinking about their pricing: they should include these mandatory expenses in their invoicing.

Pension and social security contributions are mandatory to salaried workers as well, and they, too, pay part of the benefits themselves. However, the calculation and filing of salaried workers’ pension and social security contributions differs from the practices applied to entrepreneurs.

https://www.etk.fi/en/finnish-pension-system/pension-security/pension-coverage-and-insurance/self-employed/