You can now create an estimate of the TyEL contributions for 2023 in the Varma Online Service. All you need is an estimate of next year’s payroll. The service automatically takes into account the latest estimate of the TyEL contribution percentage and for larger employers the impact of their contribution category. If your situation changes, you can always make a new contribution estimate. In the service you can still predict your company’s TyEL contribution for the current year.
The Varma Online Service contribution estimate includes:
- an estimate of the TyEL contributions for the whole year (in euro)
- an estimate of the TyEL contribution percentage and employees’ contribution
- an estimate of the client bonus and administrative cost component.
The service always uses the most precise estimate of the 2023 TyEL contribution percentages, Varma’s administrative cost component and client bonuses. The estimates and are based on the 2022 contribution level. The Ministry of Social Affairs and Health will confirm the TyEL contribution percentage in the autumn.
Changes to how the TyEL contribution is determined 1 Jan 2023
Following a legislative amendment, there will be differences in TyEL contributions according to pension company as of 1 January 2023. In future, each earnings-related pension insurance company will set its own administrative cost component. The administrative cost component is a component of the TyEL contribution required for implementing earnings-related pensions and managing insurance. To date, the administrative cost component has been the same size in all earnings-related pension insurance companies. If an earnings-related pension insurance company has been efficient, it has refunded the unused portion of the administrative cost component, i.e. the loading profit, to its customers as part of the client bonuses paid to customers the next spring. In future, our customers will experience the efficiency of Varma’s operations directly in the form of low TyEL contributions.
As no loading profit will be produced in the future, client bonuses will be based only on the solvency of each earnings-related pension insurance company. The first time, the change will show in the client bonuses paid in spring 2024. As the most solvent earnings-related pension insurance company, Varma has a solid foundation for paying excellent client bonuses also going forward.
How client bonuses are calculated in the contribution estimate
The amount distributed as client bonuses in 2023 is based on Varma’s solvency and administrative cost savings for 2022. The insurance-specific estimate for client bonuses is also affected by the estimated payroll and fund accrued from insurance contributions. The amendment therefore does not affect the client bonuses that will be paid next year.
Read more about the change in the TyEL contribution in our article "Changes to how TyEL contributions are determined – Varma’s efficiency and solvency will directly benefit customers".
How to make a contribution forecast in the Varma Online Service
Making a TyEL contribution estimate is easy:
Log in to the Varma Online Service - Go to the ‘Estimates and reports’ tab in the Insurance policies section
- Select in the service for which year you wish to make the estimate and click on ‘Make a new estimate’
- Write an estimate of the payroll for the estimate year.
If your payroll estimate for next year changes or you want to try making an estimate with a different payroll amount, you can always make a new estimate in the service. You can also make an estimate for this year.
The estimated contribution percentages used in the 2023 forecast will change if any changes take place over the autumn. The change will impact new estimates.
What do they mean?
The administrative cost component is the part of the TyEL insurance contribution that covers, for example, the earnings-related pension insurance company’s costs resulting from managing insurance, making pension decisions and paying pensions.
The loading profit means that the earnings-related pension insurance company has operated efficiently and has not used the entire administrative cost component.
Solvency means that the earnings-related pension insurance company has sufficient assets in relation to its pension liabilities. The more solvent an earnings-related pension insurance company is, the higher the client bonuses that it can pay to its customers.
A client bonus is a discount given on the TyEL contribution, which is taken into account retroactively in the contribution for the following calendar year.