Are you an entrepreneur or a self-employed person?
If the answer is yes, you have probably already heard about YEL insurance.
This is a legal tool that protects entrepreneurs in Finland against any unforeseen events and guarantees their right to a pension, unemployment benefits and other social security payments (from Kela) in case of illness or disability, for example.
Entrepreneurs starting a business must bear in mind that this kind of insurance is not a voluntary contribution. As the pension insurance company Elo explains on its website, "YEL insurance is a statutory insurance and cannot be replaced by voluntary pension insurance."
Furthermore, the Finnish Centre for Pensions monitors the insuring of entrepreneurs and, annually, sends out letters to those it believes may be obliged to take YEL insurance.
However, being up to date with YEL payments is not only convenient to comply with legal obligations and avoid claims from the Finnish administration. When an accident or any other unforeseen event occurs, the benefits of being insured far outweigh the costs.
In this article we will explain in what cases an entrepreneur should take out YEL insurance.
Cases in which you must have YEL insurance
If you are an entrepreneur, you must take YEL insurance coverage within 6 months from the date on which your business activity began if:
1. You are a self-employed worker between the ages of 18 and 68.
2. Your YEL income is at least 8,063.57 euros for the year 2021.
If the entrepreneurial activities are so minimal that the YEL income falls below the minimum limit, voluntary YEL insurance can still be taken. Insuring is also voluntary for the self-employed who are receiving an old-age pension in accordance with the employment pension legislation. This voluntary insurance can be terminated whenever one chooses, but never retroactively.
3. The entrepreneurial activities have lasted without interruption for at least 4 months.
4. You work in your own company (ownership more than 30%).
YEL insurance is not required if you simply own a company, but entrepreneurial activities carried out part-time must also be insured if the other requirements are met.
5. A family member works in your company.
Under the Finnish Pensions Act, this requirement applies to the entrepreneur's spouse or common-law spouse, children, parents and their spouses or registered partners residing in the same household.
For different business forms
YEL insurance can be taken out regardless of the company form:
Professional and private entrepreneurs, people who participate in partnerships, limited liability companies or cooperatives ... even light entrepreneurs are legally required to have YEL insurance if they meet the criteria described above.
Anton Ropa, a pension insurance expert at Elo, which serves a third of Finnish companies and more than 40% of the self-employed in Finland, points out that the key element here is that entrepreneurs and the self-employed are responsible for their own insurance.
“This instrument ensures that they accrue employment pension for their retirement and provides security if they become ill, have children or in the unwanted event of unemployment.”
Starting entrepreneurs are now entitled to a 22% discount on YEL contributions for the initial 48 months of business.
Do you need YEL-insurance or do you have questions about YEL or TyEL matters? Read more information and let Elo’s sales service help you.