Who is a Self-Employed Person within the Meaning of the Self-Employed Persons’ Pensions Act (YEL)?

Independent entrepreneurs fall within the scope of the Self-employed Persons’ Pensions Act (hereinafter referred to as “YEL” from the Finnish name ‘Yrittäjän eläkelaki’). An insurance provided in the YEL is statutory if the entrepreneur fulfills the conditions. A self-employed person under YEL is a person, who undertakes gainful work but is not in an employment relationship in the private or the public sector or in any other employment relationship. Accordingly, mere ownership of a business is insufficient but the owner must also work. In addition, the self-employed person must be between the age of 18 and 67 and have an income of a specified amount provided in YEL. In 2010 the lower limit was 6,775.60 euros a year. Self-employed persons not falling within the scope of YEL may nevertheless take out a voluntary, self-employed persons’ pension insurance. YEL is not applicable if the gainful employment in question is subject to another pension law regime. In addition, the gainful employment needs to have been carried out for at least four months to fall within the scope of YEL.

It is important to note that YEL is, with certain conditions, equally applicable to self-employed persons working abroad as well as foreign self-employed persons working in Finland. An entrepreneur who receives pension as old age pension may also be insured according to YEL.

A partner of a limited liability company, working in a managing position belongs also to the scope of YEL when he/she owns by himself/herself of with his/her family members a certain percentage or more from the company or voting rights they provide.

Also the partner of a general partnership and the general partner of a limited partnership as well as members of groups, organizations and trusts, who are personally liable for the business entity’s commitments, are also within the scope of YEL.

The self-employed person’s spouse and children, who live in the same household as the self-employed person, are also insured under YEL if they work for the company without remuneration. If the spouse or children are paid for the work they undertake, they must be insured in accordance with the employment pension laws.

Indirect ownership may also lead to a person being insured under YEL. An employee of a limited liability company is within the scope of YEL if he/she individually or in concert with members of his family has controlling power of the company and is employed in a senior position.

In uncertain situations it is possible to verity from the Finnish Centre for Pensions or from the pension insurance company whether or not the self-employed person and his/her family members belong to the scope of YEL or to the scope of another pension law.