What is YEL income?
YEL earned income refers to the monetary value of the entrepreneur’s labour input. It is important for entrepreneurs to remember that YEL earned income does not refer to the salary that the entrepreneur pays themselves from the company. Rather, YEL earned income is a figure depicting the value of their labour input on which the entrepreneur’s social security is based.
How do I calculate my YEL earned income?
You can get an estimate for your YEL earned income with Ilmarinen’s YEL earned income calculator. You can also use the YEL earned income calculator to compare the effect of YEL earned incomes on social security and select the most suitable option for yourself.
How can I determine my YEL earned income?
Determining the correct level of YEL earned income is important, as it affects the YEL contribution and future pension through YEL insurance. By sizing the earned income appropriately, the entrepreneur receives the required social and financial security for both their career and after it. It is important for entrepreneurs to remember that the YEL earned income is ultimately confirmed by the pension insurance company.
YEL contribution is based on the YEL earned income. If the YEL earned income is too low, this may lead to insufficient YEL contributions, thus lowering social security and the future pension. However, an unnecessarily high YEL earned income may lead to unnecessarily large YEL contributions, thus weakening the entrepreneur’s financial situation.
It is possible to change the YEL earned income if your business faces changes affecting your labour input. For example, changing your employment status to a part-time or full-time business may require you to reassess your YEL earned income. The YEL earned income cannot be changed retroactively, so it is a good idea to make changes immediately.
How does the YEL earned income affect an entrepreneur’s accrued pension?
As an entrepreneur, your pension is comprised of all your earnings under paid employment and your business. You may also accrue pension when you graduate from your studies or receive an unemployment allowance or other social benefits.
An entrepreneur covered by YEL insurance accrues an employment pension of 1.5 per cent of their annual YEL income. An exception to this are those aged 53–62, who accrue a pension of 1.7 per cent from their YEL earned income during the transition period between 2017 and 2025. Correspondingly, the YEL contribution percentage is slightly higher for this age group.
What else does the YEL earned income affect?
- Sickness allowance: Entrepreneurs are entitled to Kela’s sickness allowance, which covers losses in earnings due to disability lasting less than a year. The sickness allowance must be applied for from Kela two months after the beginning of the disability. The sickness allowance is paid after disability has lasted at least for the qualifying period. If the entrepreneur has YEL insurance, the qualifying period is the date of falling ill. If the entrepreneur does not have YEL insurance, the qualifying period is the same as that for wage-earners: the day of falling ill and the following nine business days.
- Parental allowance: the YEL earned income determines the amount of parental allowance you receive. The parental allowances paid by Kela are determined by your annual earnings. As an entrepreneur, your annual earnings are based on your YEL earnings income. If you are employed outside your own company, in addition to your business activities, the amount of your daily allowance is affected both by your earnings as an employee and by the entrepreneur's YEL earnings income. The annual earnings are calculated based on the earnings for the 12 calendar months preceding the calendar month in which entitlement to the benefits commences.
Experts at your service in YEL-related matters
Determining the amount of YEL insurance to the correct level may seem difficult. Pohjola Insurance's experts will be happy to help you calculate the YEL contribution and YEL earned income personally. Request an offer, and our expert will be in touch with you. At the same time, you will receive an offer on other insurance policies for entrepreneurs if you wish.