YEL reform: earned income becomes alternative pension basis

The government has tabled a billTelp letting a self-employed person choose between two bases for confirmed income under the Self-Employed Persons' Pensions Act (yrittäjän eläkelaki, YEL): the pension institution's overall assessment, as today, or a new alternative based on the entrepreneur's own earned income (ansiotulo)Telp. Revised after consultation, the bill would enter into force on 1 April 2028Telp, with the determination provision effective already on 1 January 2028Telp so institutions can collect earnings data first.

The choice would bind for at least three yearsTelp, with new selection data and re-confirmed income every three years. Earnings-based confirmed income could be no lower than the YEL insurance floorTelp — EUR 9,423.09 per year at the 2026 levelTelp. Overall-assessment income would have to reach at least 50 per cent of earned income after transitionTelp: 30 per cent in 2028, 35 per cent in 2029, 40 per cent in 2030, 45 per cent in 2031, 50 per cent from 2032Telp. Institutions would check the minimum yearly — the earnings track against Incomes Register (tulorekisteri) data, the assessment track against the income ratio.

Earned income would primarily mean YEL-activity earnings in the Incomes Register where availableTelp — changed from the consultation draft's last-completed-taxation basis. Otherwise the fallback is taxable earned income from the most recently completed taxation, in both cases excluding the earned-income slice of dividends. Real-time register data are not available for all groups alike — private traders (yksityiset elinkeinonharjoittajat), for example, generate none mid-tax-year — so the fallback matters. An entrepreneur who wants the new basis from 1 April 2028Telp could request the selection data from the start of 2028; one who requests nothing keeps current income, deemed assessment-based, with annual checks from the start of 2029 and the basis choice following the three-year rhythm.

Contribution flexibility (maksujousto) would widen from 20 to 25 per cent below normalTelp, with several blocking conditions removed. The 22 per cent starters' discount would end for new entrepreneurs; an existing discount continues without notice unless given up, but keeping it bars the earnings-based basis and the flexibility. Insurance could be suspended for a sickness or parental allowance period of at least three months and reinstated within a year by lighter procedure if the business is unchanged. Institutions would have to justify assessment-based income earlier, so entrepreneurs can supply more information at the determination stage. The impact assessment for 2033 sees confirmed income falling for nearly 40 per cent of insured, rising for just under 20 per cent and unchanged for nearly 50 per cent — falls on smaller earnings, rises where earnings are high relative to current income. This is a proposal to parliament, not enacted lawTelp.

Legal basis: government proposal amending the Self-Employed Persons' Pensions Act (yrittäjän eläkelaki) and the Act on the Finnish Centre for PensionsTelp; entry into force proposed 1 April 2028 (determination provision 1 January 2028).