Adoption decision: The activation of YEL insurance

This is a decision pursuant to Section 28 d of the Act on Information Management in Public Administration (906/2019, Public Information Management Act) regarding the matter of Varma introducing an automated decision-making procedure for the activation of YEL insurance under the Self-employed Persons’ Pensions Act (1272/2006, YEL). The decision-making procedure will be introduced on 3 April 2025.

This adoption decision replaces, as of the date of the introduction of the decision-making procedure, the adoption decision of 26 September 2024 concerning an automated decision-making procedure for the activation of YEL insurance.

Varma is introducing an automated decision-making procedure for activating YEL insurance as of 3 April 2025.

This decision confirms that the automated decision-making procedure for activating YEL insurance, which Varma is introducing on 3 April 2025, complies with the Administrative Procedure Act (434/2003) and the Public Information Management Act.

Chapter 8 b of the Administrative Procedure Act stipulates the conditions that must be met, in addition to what is stipulated elsewhere in the act, in order for an authority to be able to make a decision that ends the processing of the matter using automated decision-making without the decision being verified and approved by a natural person.

The authority must assess beforehand which matters are of a nature that they can be decided using automation. The regulations on automated decision-making also apply to Varma when it carries out its task as an implementer of statutory earnings-related pension cover.

In accordance with section 53 e, subsection 2 of the Administrative Procedure Act, a matter can be decided by means of automation if it does not include factors that would require case-specific consideration based on the prior assessment of the party making the decision, or if the processor of the matter has, on a case-specific basis, considered the factors required for automated decision-making.

Furthermore, according to section 53 f of the Administrative Procedure Act, a condition for automated decision-making is that a natural person whom the decision applies to can, in all respects, require that it be corrected free of charge as stipulated in the Administrative Procedure Act, chapter 7 a, or with an equivalent demand, which is processed by the authority having made the decision or by an authority that belongs to the same controller.

The automated decision-making procedure for YEL insurance at Varma is structured in such a way that processing that requires the consideration of an expert (section 53e (2) of the Administrative Procedure Act) or situations that otherwise require reviewing by a processor are directed to a natural person for processing. This has been achieved using the so-called exclusion technique so that only decision-making situations that have not been separately excluded enter the automated process. All such work stages that require consideration by a processor have been excluded from automated processing.

The activation of YEL insurance refers to the process in which the entrepreneur is insured under YEL. The entrepreneur is given a decision confirming the start date of the insurance and the annual YEL income. The automated resolution of the matter is based on the applicable act and processing rules prepared on the basis of prior consideration.

The obligation of an entrepreneur to insure themselves according to YEL and the conditions for insurance are laid down in sections 1, 3, and 4 of YEL. The granting and start date of the insurance are stipulated in YEL, section 111.

As stipulated in section 112, paragraph 1 of YEL, the pension institution confirms the annual YEL income equivalent to the entrepreneur’s work input when the insurance begins. The YEL income is the wages or salary that would reasonably be paid if a person with similar skills and knowledge was hired to perform the self-employed person’s work under YEL, or compensation that can otherwise be considered to correspond on average to such work. According to the section’s paragraph 2, the income is confirmed based on an overall assessment. When confirming the amount of YEL income, the aforementioned wages or salary and compensation are considered to be the median pay of private-sector, full-time workers in the sector, in addition to which, other information describing the amount of the self-employed person’s work input, the scope of their entrepreneurial activities, their skills and knowledge, and the value of their work input is taken into account.

When confirming the YEL income as part of activating the insurance, the Finnish Centre for Pensions’ YEL income recommendation calculation service is used as tool in determining the YEL income. The calculation service generates a YEL income recommendation based on the median salary in the sector and the sector and net sales data provided by the entrepreneur in their insurance application, as well as a +/- 30% leeway for the YEL income. The calculation of the recommended YEL income and the data used in the calculation are described in the Finnish Centre for Pensions’ application instructions YEL-työtulosuosituksen taustalaskentapalvelun laskentakaava (the calculation formula for the YEL income recommendation background calculation service).

According to section 112 of YEL concerning the confirmation of YEL income, the confirmation of YEL income requires an overall assessment. As the Finnish Centre for Pensions’ YEL income recommendation calculation service is used as a tool when determining the YEL income, the entrepreneur’s YEL income is practically always resolved in the same way based on the underlying data from the calculation service if the entrepreneur does not present, in the matter, any other additional data impacting their YEL income. The leeway offered by the YEL income recommendation aims to take into account, in addition to the median salary of the entrepreneur’s sector and the scope of the entrepreneurial activities, other information specified in the law that describes the amount of the entrepreneur's work input, their skills and knowledge, and the value of their work input. If the income requested by the entrepreneur is within the range of the YEL income recommendation provided by the calculation service, and the entrepreneur does not present any additional information impacting the YEL income that would prevent automated decision-making, according to Varma’s assessment, the resolution of the matter does not include any factors requiring case-specific consideration. In Varma’s assessment, matters requiring case-specific consideration are also not included in certain pre-determined situations and in situations that are based on prior consideration in which the income applied for by the entrepreneur differs from the recommended income range provided by the Finnish Centre for Pensions’ income recommendation calculation service and the entrepreneur submits additional information affecting their income in the insurance application.

According to section 111, paragraph 2 of YEL, the insurance begins from the start of the entrepreneurial activity referred to in YEL, but the insurance is not provided retrospectively for a longer period than the current calendar year and the immediately preceding three calendar years. In accordance with section 109, paragraph 1 of YEL, the entrepreneur is obligated to take out YEL insurance as of the start of the entrepreneurial activity stipulated in YEL. Confirmation of the start date of the insurance does not, according to Varma’s assessment, thus, as a rule, require case-specific consideration.

The insurance application will be automatically processed in situations where the insurance can be activated according to the entrepreneur’s application; and where the YEL income applied for by the entrepreneur is within the YEL income recommendation range provided by the Finnish Centre for Pensions’ YEL income recommendation calculation service, or the income applied for can otherwise be considered to correspond to the entrepreneur’s work input in certain situations based on prior consideration and information provided by the entrepreneur; and where there are no other factors that, according to the decision-maker’s preliminary consideration, would require case-specific consideration or review by a natural person.

The decision made in the automated decision-making procedure is based on the information provided in the insurance application, the information retrieved from background systems and registers, the conditions for granting the pension as stipulated in law, and the recommendation provided by the YEL income recommendation calculation service of the Finnish Centre for Pensions. If the YEL income the entrepreneur applies for as the basis for their insurance differs from the recommendation given by the Finnish Centre for Pensions’ YEL income recommendation calculation service based on the information provided and, taking into account additional information provided by the entrepreneur, an automated decision cannot be made on the application, the application will be directed to be processed by a natural person. Certain situations also require case-specific discretion, where the information provided in the application or available in the registers requires that additional clarification be obtained. In these situations, the application is directed to be processed by a natural person.

The entrepreneur can, in all respects, demand a rectification of the decision free of charge through an appeal as specified in chapter 7 a of the Administrative Procedure Act. A decision concerning the activation of YEL insurance can be appealed in accordance with YEL, chapter 10.

• Processing rules for the automated decision-making procedure regarding the activation of YEL insurance at Varma Mutual Pension Insurance Company
• Tasks and decision-making
• Quality management, quality assurance, and handling of error situations
• Data protection and information security descriptions
• Description of the YEL income recommendation calculation service (Finnish Centre for Pensions)

• Administrative Procedure Act (434/2003)
• Act on Information Management in Public Administration (906/2019)
• Self-Employed Persons’ Pensions Act (1272/2006)

The decision-making procedure will be introduced on 3 April 2025.

This decision on the adoption of an automated decision-making procedure was made on 31 March 2025.

This decision on the adoption of an automated decision-making procedure was made by Varma Mutual Pension Insurance Company’s actuarial and insurance services’ management team. The Senior Vice-President responsible for actuarial and insurance services is Pasi Mustonen.

For more information on Varma's automated decision-making procedure for YEL insurance decisions, please contact Insurance Services Director Riikka Nivus, tel. +358 10 192 100 (switchboard) or firstname.lastname(at)varma.fi.

Decisions and releases concerning Varma’s automated decision-making procedures are publicly available on Varma’s website at varma.fi.