Employer, get ready for changes in 2021

Traditionally, at the turn of the year, employers’ and employees’ TyEL contribution percentages and entrepreneurs’ YEL contributions have changed. Now the turn of the year will bring with it many other changes too, of which payroll accountants in particular should be aware. Our experts have put together a useful checklist.

Share incentives, dividends based on work input and additional leave days in accordance with the Annual Holidays Act

Already a year ago we reported that some fine-tuning would be taking place in the TyEL interpretation of share incentives and employee stock options at the start of 2021. The changes will apply to employee stock options granted on 1 January 2021 or thereafter. As the share incentive and employee stock option schemes are often complicated, Varma can provide you with a statement or decision on whether they are pensionable earnings or not.

The dividends based on work input received by the employee will become earnings subject to TyEL. The change will apply to all dividends based on work input paid after 1 January 2021, regardless of when they were earned.

Check with the payroll system supplier that the necessary changes have been made to the payroll system to make sure that the notification to the Incomes Register is correct in future. Also the Incomes Register instructions have been updated and we recommend you take a look.

Changes are also taking place in the income type of the compensation paid based on section 7a of the Annual Holidays Act, which needs to be reported to the Incomes Register. The new income type is 216. The compensation is not considered to be pensionable earnings during the employment relationship or after it has ended.

Compensation when employment ends

The year in progress has been challenging for many companies and temporary lay-offs and dismissals have sadly become a harsh reality for many people. The ending of an employment relationship after a temporary lay-off or with a golden handshake impacts the extent to which an employee’s pay at the end of employment can be considered pensionable earnings. These situations can be very nuanced, so if you are uncertain, contact our customer service.

TyEL contributions 

The employee’s TyEL contribution withheld from the employee will remain the same even in the new year, but please remember that when an employee turns 53 or 63, the changed share paid by the employee is applied from the start of the following month.

At the start of next year, the employer’s TyEL insurance contribution percentage will change, as will client bonuses.

Varma’s eServices support your company

The Incomes Register has been in use for almost two years now and reporting to the Incomes Register has become familiar to many. Varma’s eServices have been developed to meet the requirements of the Incomes Register. You can check, for example, how the employee-specific data reported to the Incomes Register has been transferred to Varma. Our eServices will provide you with copies of the TyEL contributions, you can make contribution estimates or print out a report for the financial statements.

Retirement age and retirement

Since 2017, the minimum age for old-age pension for employees and entrepreneurs has risen by three months depending on the year of birth. This will also happen at the start of next year when the minimum age for old-age pension for persons born in 1958 will rise to 64 years. Similarly, the maximum age for retirement in the same age cohort will rise to 69 years.

When an employment relationship ends, the Incomes Register must be informed of the end of the employment relationship when the final wages are reported (termination of employment in the Incomes Register) so that old-age pension can be granted.

More information on the aforementioned topics is available in Finnish in a recording of a webinar held on 25 November called Kohti vuotta 2021 (Heading into 2021). 

Do you need help?

We are available by phone at tel. +358 10 192 102 and on chat Mon–Fri between 8 a.m. and 6 p.m. You can also send us a message through the eServices.

Log in to Varma’s eServices at the address varma.fi/en.