The Finnish Pension Alliance (Tela) has urged the government to lower the earnings threshold for self-employed YEL pension insurance, so that “hidden” income from small-scale work is also brought into the system.

Its statement comes amid a planned reform of YEL, with the Ministry of Social Affairs and Health appointing Jukka Rantala to carry out a review, due in November.

Currently, self-employed people earning under €9,200 a year are not required to pay pension contributions, and do not accrue a pension. By contrast, employees covered by TyEL start accruing pension rights at €70 a month.

Tela argues that there is no need for a separate system for so-called light entrepreneurs – people who use invoicing services without registering as businesses – but instead for a broader reform of YEL, starting with a new definition of earned income.

“There is no need for a separate system for light entrepreneurs, as the employee–entrepreneur split already covers all forms of work,” said Tela CEO Suvi-Anna Siimes.

“Creating a new category would complicate the Finnish labour market and undermine the clarity of the pension system. At worst, it would also stifle the growth ambitions of the smallest entrepreneurs.”

Tela proposes that contributions should be based on actual earned income rather than the current notional assessment, with income information taken directly from registers. This would, it said, ensure equal treatment of workers and simplify administration.

The alliance also supports moving towards a partially funded model for YEL, similar to TyEL, to reduce reliance on state subsidies.

“We believe that starting to fund the YEL is the only way to solve in the long term the growing problem of state support currently associated with the system,” said Siimes. “The introduction of funding could be phased in gradually, as was done with TyEL.”

The Orpo government is expected to decide on the next steps once the Rantala review is published in November.

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