Pension System

Employees’ pension insurance (TyEL)

In Finland, employers take out pension insurance for their employees. Earnings-related pension insurance is regulated by legislation. If you operate in Finland as a private-sector employer or as a household employer, the legislation requires you to insure your employees according to the Employees Pensions Act.

Pension earned in Finland can be paid to a pension recipient living abroad. Foreign employees working in Finland are also usually insured in Finland and people working abroad are insured in the country of employment.



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Entrepreneurs’ employment pension insurance (YEL)

All full-time and part-time entrepreneurs who earn more than €7,645.25 per year (2017) must take out a mandatory entrepreneurs’ pension insurance (known as YEL insurance). This insurance is paid in the form of contributions. It is up to the entrepreneur to decide how much he or she wishes to pay. In practice, the base sum should be equivalent to the annual salary paid to other professionals doing the same type of work.

New entrepreneurs who take out YEL insurance for the first time receive a discount during the first four years. If your estimate of the year’s full income amount changes, you can modify your YEL income amount at any time during the insurance period. It is worth noting that how much or how little you pay has a direct effect on your social security benefits and your future pension. For this reason, the YEL income amount should be chosen only after careful consideration.

Please note! You must take out YEL insurance within 6 months of the date on which your entrepreneurial activity began (contributions must be paid from this date onwards).