What is YEL income and how to estimate it?
YEL income refers to the monetary value of your own work input. You estimate your YEL income yourself, and the pension insurance company confirms it.
YEL income must be set at the right level right from the start, as it is used as the basis for calculating your pension accrual and your social security. For example, daily sickness allowance, parental allowance and unemployment allowance are calculated based on your YEL income. Your YEL income also determines the amount of your YEL insurance contributions.
The lower limit of YEL income is €8,063.57 and the upper limit is €183,125.00 per year (in 2021). You can join the unemployment fund for the self-employed if your YEL income is at least €13,247 a year (2021).
YEL income is the estimated value of your own work input
Your YEL income should equal the annual salary that would be paid to an employee with the same professional skills as you have for carrying out the same work. YEL income does not mean the profit your company makes or the salary you withdraw. When determining your YEL income, also take into account how many hours you work, your company’s turnover and, if applicable, the seasonal nature of your activities.
YEL income is always estimated at the annual level. This does not mean the calendar year from January to December, but rather a 12-month period. If the value of your work input changes, you can change it as needed during the year—however not retroactively.
A self-employed person's YEL insurance is valid from 1 April until 31 December. The person has estimated her YEL income at approximately €2,000 per month. The annual YEL income for the insurance is therefore €24,000. The person’s insurance contributions and pension accrual are calculated based on the annual YEL income, however, only for the period when the insurance is valid, which, in this case, is nine months.
Where can I get help with estimating YEL income for my sector?
Finnish Centre for Pensions' offers a YEL income guide in Finnish and Swedish on their website. The guide can help you estimate the earnings level for your business sector. The income amounts the guide provides are good for estimating, in particular, the income of self-employed people who have already established their business. The work input of people just starting out their self-employment may be lower than what is stated in the guide if they have fewer customers or less work in the early stages.
If you decide to set your YEL income at the minimum level (or at the minimum unemployment insurance level) at first, don't forget to raise your YEL income to the right level when your business becomes more established. This will ensure that your social security is based on and your pension accrues according to a realistic income level for your sector.