At Varma, the first year of YEL income reviews went as planned. Following successful test groups in the spring, YEL review letters were sent out weekly to entrepreneurs between August and October. Spreading them out over a longer period gave customer service sufficient time to respond to possible enquiries.
“The legislative amendment entailed creating an entirely new process, and we wanted to make it as easy and simple as possible for our customers right from the start. The Varma Online Service worked well as our main channel for customers to take care of their matters and obtain the information and guidance they needed. It can well be said that Varma’s YEL reviews went as planned and smoothly,” states Insurance Services Director Riikka Nivus.
Varma reviewed the YEL incomes of 12,000 self-employed persons
The earnings-related pension sector this year reviewed the incomes of self-employed people whose income amounted to less than EUR 15,000. For Varma, that meant 12,000 entrepreneurs. We informed those scheduled for an income review well in advance during the spring, explaining how the reviews will progress and what the schedule is.
“Aside from a few individual cases, our customers understood the need for the reviews. The legislative amendment gave us a clear framework and authority to ensure that an entrepreneur’s previously confirmed YEL income still corresponds to their current situation and thus to strengthen both their pension accrual and their other social security. People were objective and understanding, even though social media and other media might have given a different impression,” says Nivus.
We informed entrepreneurs whose YEL income matched the value of their work input that a review was conducted and their YEL income was not changed. Fifteen per cent of the entrepreneurs subject to a review received that notice.
If the review determined that the entrepreneur’s YEL income did not match the value of their work input, the entrepreneur received a proposal for a new level of YEL income. Ten per cent of entrepreneurs objected to our YEL income proposal and provided an explanation of the factors affecting the value of their work input, as well as their opinion of their income level. In the explanations presented by entrepreneurs, among the reasons for objecting to our proposed YEL income were insolvency, lack of confidence in the system, information about the wrong company and alternative pension arrangements.
Twenty-seven per cent of entrepreneurs responded to the messages we sent concerning a proposed new YEL income level.
Entrepreneurs who received a decision concerning changing their YEL income could appeal the decision, which a small number of entrepreneurs did.
A new level of YEL income was objected to the most in the barber and hairdressing and other health services sectors and by customers whose recommended YEL income was, based on the Finnish Centre for Pensions’ calculator that was used in the reviews, between EUR 20,000 and 40,000.
“In these cases, the recommended YEL income given by the calculator is very close to the company’s net sales,” explains Nivus.
YEL income will be reviewed regularly going forward
Entrepreneurs whose YEL income was reviewed this year will be subject to a review the next time in 2026. A maximum increase of EUR 4,000 will still apply to those entrepreneurs then.
In 2024, we will review the YEL incomes of the YEL insurances that started before 1 January 2023, for which the YEL income is less than EUR 25,000 and for which the YEL income was previously confirmed or substantially changed at least three years ago. At Varma, this group includes 8,000 customers. If your YEL income is scheduled to be reviewed in 2024, we will send you information about the review during the spring and, later as a separate message, a clear proposal concerning the amount of your YEL income and further instructions. If your YEL income is already at the correct level or if it would change by no more than 5 per cent, you will not receive a new proposed YEL income level, but instead a notice stating that a review has been conducted. We expect the reviews to begin in May 2024.
The review process will be developed next year
YEL reviews conducted by earnings-related pension companies are based on the YEL calculator developed by the Finnish Centre for Pensions (ETK). For next year’s reviews, ETK is developing the calculator together with the Finnish tax authority to, among other things, take net sales data better into account for only those companies in which the self-employed person has holdings. The material received by the earnings-related pension insurance companies will thus be of a higher quality and reduce misunderstandings.
In the second year of reviews, Varma will also make its method easier and more customer friendly.
Previous news on the topic:
Entrepreneurs subject to YEL income reviews this year will be informed of their upcoming review – reviews to take place between June and November
YEL was amended – How does Varma review YEL income and whose income will be reviewed this year?
Amendment to the Self-employed Persons’ Pension Act (YEL) approved by Parliament – the amendment will clarify the determination of confirmed income
More information about the reviews can be found on Varma’s website at YEL income review.
EDITED 21.3.2024 In 2024, we will review the YEL incomes of the YEL insurances that started before 1 January 2023, for which the YEL income is less than EUR 25,000 and for which the YEL income was previously confirmed or substantially changed at least three years ago.
Useful information!
When do I need YEL insurance in 2024? How much will YEL insurance cost in 2024? What is the minimum amount of YEL income in 2024? What kind of discount can I get on YEL insurance? YEL insurance, i.e. pension insurance for the self-employed, is statutory pension insurance for entrepreneurs.