Already when starting your company, you should consider and plan your pension and insurance matters. Entrepreneurs and light entrepreneurs need to take out the self-employed person’s pension insurance, the YEL insurance, when their annual YEL income exceeds the minimum limit (8 261,71 euros in 2022).
When you start a business, you need to enter the Tax Administration register. After this, the Finnish Centre for Pensions will contact you and provide instructions for taking care of the mandatory and statutory YEL insurance. You need to take out the insurance within six months of starting your business operations. Entrepreneurs take out the insurance from a pension insurance company of their choosing or an industry-wide pension fund if their industry has one.
The contribution is based on the YEL income confirmed for the insurance. The pension insurance company providing the insurance will send you invoices for the contributions.
For entrepreneurs who are under 53 or over 62 years old, the YEL contribution is 24.10 per cent of their confirmed YEL income and, for those aged 53 to 62, it is 25.60 per cent (in 2022).
First-time entrepreneurs get a 22-per-cent discount of the YEL contribution for the first four years (48 months).
For entrepreneurs, insurance contributions obviously form a significant expenditure, but the good news is that the YEL contribution is fully deductible in taxation. Even light entrepreneurs are entitled to the YEL tax deduction.
You cannot replace the statutory pension insurance, which is decreed in the Self-Employed Person’s Pensions Act, with voluntary insurances.