YEL (Self-employed pension insurance)

Detailed explanation

YEL insurance is mandatory for self-employed individuals whose business activity continues for at least four months and whose estimated annual work income exceeds a minimum threshold (approximately 9,400 euros in 2026). Unlike employees who have their pension arranged by employers, self-employed people must obtain and pay for their own YEL insurance from a pension insurance company.

The cornerstone of YEL is your declared work income (YEL-työtulo), which should reflect the salary you would pay someone else to do your work. This is not the same as your business profit or revenue. Setting your YEL income at an appropriate level is crucial because it affects not only your future pension but also your eligibility for daily allowances, including sickness benefits, parental benefits, and unemployment security.

Many self-employed people are tempted to minimize their YEL income to reduce current costs, but this directly reduces their social security coverage and pension accumulation. The Finnish Centre for Pensions recommends setting YEL income realistically based on the value of your work, typically between 15,000 and 50,000 euros annually for full-time entrepreneurs.

Current rates and requirements (2026)

• •YEL contribution rate: Approximately 24.40% of declared work income

• •Discount for new entrepreneurs: 22% reduction for the first 48 months

• •Minimum YEL income: Approximately 9,423 euros per year

• •Maximum YEL income: Approximately 214,000 euros per year

How it affects expats

• •Mandatory for entrepreneurs: If you start a business or work as a freelancer, YEL likely applies to you

• •Affects benefits: Low YEL income means reduced parental leave pay, sick pay, and unemployment benefits

• •Tax deductible: YEL contributions are fully deductible from taxable income

• •Combined with TyEL: If you have both employment and self-employment, you may have both insurances

• •Pension follows you: Accumulated pension rights remain even if you leave Finland

How to get YEL insurance

• Choose a pension insurance company (Varma, Ilmarinen, Elo, Veritas)

• Apply within 6 months of starting self-employment

• Determine your YEL work income based on the value of your work

• Receive confirmation and begin paying contributions (monthly or annually)

• Adjust your work income if your business situation changes significantly

Related terms

• •Business ID (Y-tunnus) — A unique identifier for companies and organizations in Finland

• •TyEL — Employee pension insurance in Finland

• •Kela — Finland's Social Insurance Institution

• •OmaVero (MyTax) — The Finnish Tax Administration's online service for taxes, filings, and messages