Amendment to the Self-employed Persons’ Pension Act (YEL) approved by Parliament – the amendment will clarify the determination of confirmed income

The Finnish Parliament approved the proposal to amend the Self-employed Persons’ Pension Act (YEL) aiming to improve self-employed persons’ social security and pension coverage and clarify the determination of confirmed YEL income, which has a key impact on them. The concept of confirmed YEL income remains unchanged. The confirmed income is confirmed on the basis of an overall assessment which must consider the self-employer person’s actual situation. The aim is for the confirmed income to be at the right level throughout the self-employed person’s career. Going forward, earnings-related pension companies are required to monitor and regularly revise the level of a self-employer person’s confirmed income.

Today, 9 December, the Finnish Parliament approved an amendment that will enter into force as of the beginning of 2023, aiming to improve self-employer persons’ pension coverage and social security and support the implementation of the Self-employed Persons’ Pension Act. The aim is for the confirmed YEL income to better match the value of the self-employed person’s work contribution.

“The amendment is a step in the right direction, even though a number of desired developments still remain on the table. However, the act will provide our operations with a clearer and more consistent operating model for confirming and adjusting the confirmed income throughout the earnings-related pension sector. We will now assume a new responsibility for regularly verifying that the earned YEL income develops in the right direction over the years and as entrepreneurial activity,” says Varma’s CEO Risto Murto.

The confirmed income is confirmed on the basis of an overall assessment

Confirmed YEL income will continue to mean the monetary value of the self-employed person’s work contribution. The confirmed income must correspond with the salary that would be paid if a person with similar skills and knowledge was hired to do the self-employed person’s work. The approved amendment thereby retains the concept of confirmed YEL income, but requires the earnings-related pension company to carry out an overall assessment based on the industry median salary, amount of work contribution, extent of entrepreneurial activity, the self-employed person’s professional skill and value of their work contribution.

It can be difficult for a self-employed person to assess the statutory level of confirmed YEL income, so earnings-related pension companies adopted a new confirmed YEL income calculator for self-employed persons developed by the Finnish Centre for Pensions ETK in September. The calculator provides a confirmed income recommendation and range within which the confirmed income should primarily be based on the self-employer person’s sector and turnover.

“The calculator is a tool, and it is obvious that we also need other information in order to make the overall assessment. Therefore, we always request additional information that can have an impact on the amount of the confirmed income when applying for insurance or adjusting the confirmed income. The additional information can be provided easily in our online service when making an insurance application or confirmed income application. Nevertheless, you can always contact us if you are wondering about the confirmed income,” says Arja Iisakkala, Insurance Service Manager at Varma.

Try out the calculator – confirmed YEL income calculator

Read more about the confirmed YEL income calculator in our news release YEL income calculator makes it easier to determine an entrepreneur’s confirmed YEL income.

The self-employed person’s confirmed income will be monitored and adjusted once every three years going forward

An entrepreneur’s accrued pension and other social security cover are calculated based on the confirmed YEL income. The amendment requires earnings-related pension companies to adjust an entrepreneur’s confirmed income regularly as of 1 January 2023 applying overall assessment. The amendment aims to ensure that the confirmed income remains up to date and that the excessively low confirmed incomes of new entrepreneurs, for example, will not remain too low as the entrepreneurial activity develops. Going forward, the adjustment will be made once every three years if the self-employed person has not adjusted their confirmed income before that.

Varma will begin the adjustment of confirmed YEL incomes in accordance with the earnings-related pension sector’s joint operating models in late spring 2023. Before the start of the actual adjustment process, we will always contact the entrepreneurs whose confirmed income will be adjusted.

In its simplest form, Varma’s review process will look like as follows to entrepreneurs:
• If the review of the confirmed income does not result in an adjustment, the entrepreneur will be sent information about the confirmed income being at the statutory level.
• If a need for adjustment emerges in the review, the process will proceed by consulting the entrepreneur. At this point, the entrepreneur has an opportunity to provide additional information about factors influencing the confirmed income. Such information includes information about the amount of the entrepreneur’s work contribution, extent of entrepreneurial activity, the entrepreneur’s professional skill and the value of the entrepreneur’s work contribution.
• The additional information provided by the entrepreneur is taken into consideration when assessing the correct level of confirmed income.
• If the entrepreneur does not provide additional information, the confirmed YEL income will be confirmed at the level proposed in the consultation.
• The entrepreneur always receives a justified decision on the confirmed income, which they may appeal against.

Good to know with regard to the adjustment of confirmed YEL income in the earnings-related pension sector

Going forward, an earnings-related pension company must revise the entrepreneur’s confirmed income once every three years. The obligation to revise applies to all earnings-related pension companies. Changing the earnings-related pension company, for example, has no impact on the revision or its timing.

If your insurance commenced before 1 January 2023, the revision of your confirmed income will be subject to the transitional provisions below:

  • We will revise the confirmed income of entrepreneurs with incomes of less than EUR 15,000 by the end 2023, the confirmed income of those with incomes of less than EUR 25,000 by the end of 2024 and the confirmed income of those with incomes of more than EUR 25,000 by the end of 2025. If your confirmed income has been substantially adjusted during the past three years, the revision will only be made once three years have passed since your confirmed income adjustment.
  • If your confirmed income was last confirmed before 1 January 2023, your confirmed income can be increased by a maximum of EUR 4,000 per adjustment in the first two adjustments. With your consent, the increase in confirmed YEL income can be higher than this.
  • You can still apply for an adjustment to your confirmed YEL income in case of a substantial change in your entrepreneurial activity. In this case, your confirmed income will be confirmed at the statutory level, in which case the increase can be more than the EUR 4,000 mentioned above.

Government proposal HE 102/2022 vp ( (in Finnish)

Minutes of the Parliament’s session of 9 December with concerning the above-mentioned item PTK 137/2022/9 vp ( (in Finnish)

Information about the review of the government proposal HE 102/2022 vp ( (in Finnish)

Varma’s news releases on the topic
What is the amendment proposed to the Self-employed Persons’ Pension Act (YEL) about?

Varma helps entrepreneurs define the appropriate level of confirmed YEL income

Financial Supervisory Authority published a theme evaluation of the implementation of insurance that is compliant with the Self-employed Persons’ Pension Act (YEL) in Finnish

You might also be interested in these