Pension in Finland – what do I need to know as an entrepreneur or employer?

The Finnish pension system is reliable. It is divided into an earnings-related pension, which is earned by working in Finland, and a national pension, which is based on living in Finland. Both include an old-age pension and a disability pension.

Pensions are an integral part of the Finnish social security system, and therefore, it is fairly rare for people to take out voluntary pension insurance. The Finnish pension system is designed to guarantee basic security for everyone in all circumstances of life, such as old age, disability, and death of the breadwinner.

The purpose of the national pension and the guarantee pension is to secure basic income if the earnings-related pension is particularly small or non-existent. The national pension covers all people who live in Finland for at least a certain minimum period of time.

In contrast, the earnings-related pension covers people who have earned income, including both employees and self-employed persons. Employees are covered by TyEL insurance, which their employer is responsible for taking out. Self-employed persons, on the other hand, are covered by YEL insurance, which they take out themselves. Both of these insurances are statutory, and provided by private pension insurance companies, such as Varma.

In 2023, the average pension for all pensioners was EUR 1,869 per month. This includes pensions paid abroad and survivors’ pensions. At the end of the same year, the average earnings-related pension (excluding part-time and partial old-age pensions) for people living in Finland was EUR 1,826 per month.

Read more about average pensions on the Finnish Pension Centre's website.

The guarantee pension provides residents of Finland with a minimum pension if their total pension incomes are less than EUR 968.69 per month before taxes (in 2024). The amount of minimum pension is EUR 976.59 (in 2024), which will be fully paid only to persons with no other pension income.

The earnings-related pension in Finland covers both employees and entrepreneurs. YEL or TyEL insurance provides security against several long-term risks, such as old age or disability. With YEL insurance contributions, an entrepreneur's pension increases and other social security benefits improve. On the other hand, the amount of an employee's pension depends on the TyEL contributions which are based on the amount of the employee's salary. Therefore, the longer you stay in the workforce and the later you retire, the greater your pension will be.

For an employee, pension accrues for work carried out from age 17. For an entrepreneur, on the other hand, pension benefits accrue from age 18. Your year of birth determines the age at which you can receive earnings-related pension. Calculate your retirement age with our pension calculator.

When becoming an entrepreneur in Finland, you need to arrange your own pension with YEL insurance. It is a mandatory insurance policy for entrepreneurs. A self-employed person's pension and social security are based on YEL insurance. You cannot replace YEL insurance with voluntary pension insurance.

YEL income determines your YEL contributions. YEL income is the monetary value of your work input, and is equivalent to the salary you would pay for the same job to someone as skilled as you are.

YEL insurance is effective from the day you start working for your company. You have six months to take out insurance, but it should take effect from the day your insured work has begun. If your entrepreneurial activities start in January, for instance, and you take out YEL insurance in April, you will have to pay the YEL contributions for January, February, and March retroactively.

You need YEL insurance if

• you are at least 18 years old,
• your self-employed activities continue for at least four consecutive months,
• your YEL income is at least EUR 9,010.28 per year (2024), and
• you work in your company or as a light entrepreneur.

Read more about when you need YEL insurance for yourself

When you hire employees, you are obliged to take care of their pension. Employer's pension insurance, or TyEL insurance, is statutory. If you have at least one employee and the salary you pay exceeds EUR 68.57 (2024), you must take out TyEL insurance.

In 2024, the basic TyEL contribution is 25.12% of employees' salaries, and an administrative cost component, specific to each earnings-related pension insurance company, is added to it. The employee and the employer participate in the costs of TyEL insurance. As an employer, you withhold your employees' contribution from their salaries. An employee's contribution depends on the age of the employee. Click here to see the employees' contributions by age. Your insurance contributions are lowered by client bonuses, which are paid out once a year in spring.

You need TyEL insurance if

• you have at least one employee working under an employment contract,
• the employee is at least 17 years old, and
• the monthly salary paid for the work is at least EUR 68.57 (2024).

Read more about when you need TyEL insurance for your employees.

As a general rule, work performed in Finland, including remote work, is insured in Finland regardless of the employer’s or employee’s nationality. This means that depending on whether you are an employer or an entrepreneur operating in Finland, you will need to take out TyEL or YEL insurance, respectively.

An earnings-related pension accrued in Finland is paid to a person in any country throughout the world. When the person leaves Finland, the pension contributions are not returned to him or her, but instead, he or she will receive a pension from Finland in the future.

Read about claiming a pension abroad on the Finnish Centre for Pensions' website