Finrepo » Creating and Starting Business in Finland » Entrepreneur's social security in Finland


Entrepreneur's social security in Finland

Entrepreneur's social security in Finland

Many people who are planning to conduct a business in Finland are interested in the question of how it is possible to protect own social security rights as an entrepreneur.

The Finnish social security system includes various forms of income security benefits for self-employed people and entrepreneurs. In Finland, there are such social security forms for entrepreneurs as pensions, health insurance, accident insurance, unemployment insurance and others.

Main content

  1. Finnish social security system. Entrepreneur's mandatory pension insurance
  2. Entrepreneur's Unemployment Security. Full-time or part-time entrepreneurship
  3. Unemployment benefits from Kela or Unemployment Fund

Finnish social security system. Entrepreneur's mandatory pension insurance, YEL

The basis of the entrepreneur's guaranteed social security is YEL income (yrittäjän eläkevakuutus) which means the self-employed person’s pension insurance, whose insurance contributions are based on his earned income (estimated annual income) under the Entrepreneur's Pension Act / Yrittäjän eläkelaki 22.12.2006/1272. YEL is an entrepreneur's pension insurance policy.

Some important factors about YEL :

  • You can calculate how your YEL income affects your social security, as well as estimate your insurance contribution using "Entrepreneur’s calculator" Varma and YEL calculator, Ilmarinen
  • Everything about Pension Security in Finland on the website of the Finnish Centre for Pensions/ Eläketurvakeskus
  • Earned income must match the entrepreneur's YEL insurance contributions
  • YEL earned income determines not only the size of the pension contributions of the entrepreneur and the size of his pension, but also determines the level of other compulsory social security benefits for the entrepreneur
  • In addition, on the basis of YEL's income, the entrepreneur pays the health insurance contribution and, on the basis of his possible wage income, the employer's social security contribution to finance the benefits provided by the Health Insurance Act 1224/2004 / Sairausvakuutuslaki 21.12.2004/1224 (e.g. sickness benefit, parental allowance, rehabilitation allowance)
  • According to YEL's lowest level of income, an entrepreneur does not benefit much from his retirement insurance, but instead of old-age and disability pensions under a pension provision law, he is more likely to receive social security (national) pension and retired payment under guarantee pension system, which are also received by persons who do not work at all. Such an entrepreneur will not ever receive a daily allowance greater than the minimum one when getting sick or staying on parental leave, just minimum daily allowance. Facing unemployment, ex-entrepreneur is dependent on labor market subsidy. Kela

It is very important for the entrepreneur to be aware of the social risks associated with his own life situation and the impact of his YEL income on the revenue in these risk situations. All information about Social security of an entrepreneur: Entrepreneur's social security - look at these pages (all in Finnish):

Entrepreneur's Unemployment Security. Full-time or part-time entrepreneurship

TE-office will find out whether you are an entrepreneur pursuant to the Unemployment Security Act (1290/2002)/ Työttömyysturvalaki 30.12.2002/1290 (in Finnish) and after that will determine whether you are employed as a full-time or part-time entrepreneur.

You are not entitled to the unemployment benefit if you are employed full-time as an entrepreneur or in your own job. Your employment is considered as full-time if the amount of work required by your business or your own job is so large that you cannot receive a full-time work. Only the amount of work required for the business activity is decisive for the assessment of the principal activity, whereas the amount of income or profit obtained from the business or the work itself do not have any significance.

If you are a part-time entrepreneur, the payer of the benefit will take into account the income of your business and will adjust the unemployment benefit accordingly.

Entrepreneur's Unemployment Security

  • Employment and Economic Development Office, TE-office
  • Entrepreneur's Unemployment Insurance Fund / Yrittäjän Työttömyyskassa (in Finnish). Using the calculators available on the website, you can calculate, for example, your membership fee or daily allowance.

Unemployment benefits from Kela or Unemployment Fund

  • After the registration as an unemployed jobseeker in the TE Service (Employment and Economic Development Office) you can apply for unemployment benefits from Kela or the earnings-related unemployment allowance from the Unemployment Fund.
  • Unemployed persons are secured either by unemployment allowance or by labor market subsidy.
  • Unemployment allowance may be earnings-related from the Unemployment Fund or the basic one from Kela.
  • The Social Insurance Institution of Finland (Kela) provides for the payment of basic security, i.e., the basic unemployment allowance and labour market subsidy.
  • For those who are insured against unemployment in the Unemployment Fund, the unemployment allowance is paid as earnings-related allowance.

Basic unemployment allowance vs. earnings-related allowance

  • The basic unemployment allowance and labor market subsidy without increases paid by Kela are around € 800 (21.5 päivää x € 37.21 per day) per month (year 2024–2027).
  • The earnings-related allowance is determined by the level of earnings or the level of insurance preceding unemployment.
  • Unemployment Fund membership is worth even at a minimum income level (when annual income is 14 803 €, 2024). According to Entrepreneur's Fund calculations (in Finnish) the earnings-related allowance at a minimum level is € 195,00 per month more than the unemployment benefit paid by Kela, i.e., € 995,02 per month.
  • In addition, the earnings-related unemployment allowance accumulates a pension of 1.5% until the minimum retirement age. There are no pension accumulations from unemployment benefits paid by Kela.
  • Pension amount, contributions and all about pension accumulation at website of the Finnish Centre for Pensions.

Entrepreneur's earnings-related daily allowance

As a rule, the daily allowance for the entrepreneur is determined on the basis of the insurance level according to which the entrepreneur has insured himself in an Unemployment Fund for 15 months before unemployment occurs. The chosen level of insurance may not exceed the confirmed annual income which your mandatory pension insurance is based on. Your unemployment insurance has to match your YEL, MYEL ( Farmers´ Pension Act / Maatalousyrittäjän eläkelaki 22.12.2006/1280) annual earnings or the annual salary of the TyEL-insured entrepreneur's family member / co-owner of the business.

The monthly average of the working income level during the last 15 months preceding unemployment is taken into account in determining the daily allowance. During this period, an increase of up to 20% may be taken into account in earnings. If your earnings are raised by more than 20%, the increased level should be maintained for 15 months, so that even a share exceeding 20% is taken into account when determining a daily allowance. (Unemployment Security Act (1290/2002)/ Työttömyysturvalaki 30.12.2002/1290 (in Finnish)).

  previous page   next page