Social Security of a Self-Employed Person in General
Self-employed persons’ social and pension cover differs from the above mentioned. It is, e.g. possible for the self-employed person to take a statutory pension insurance and stay totally outside then unemployment security system. The social security system of self-employed persons is based on the mandatory pension security which the self-employed person may, if he/she wishes, supplement with voluntary arrangements.
Self-employed persons are obliged to take out a self-employed person’s retirement pension insurance if he/she carries out business activities on a permanent basis and his/her annual business income exceeds a specified amount. The mandatory insurance provides cover for old age, incapacity to work and death.
The self-employed persons do not have statutory accident insurance. Therefore it is recommendable for the self-employed persons to take a voluntary accident insurance.
Self-employed persons do not either have wage security that employees enjoy. The self-employed person’s unemployment security consists of the basic unemployment allowance paid by the Social Insurance Institution (Kela) and the earnings based daily allowance from the unemployment fund. If the self-employed person becomes a member of the self-employed person’s unemployment benefit society, he/she is also entitled to earnings-related allowance.
Self-employed persons are also outside the scope of group life insurances so they must arrange a life insurance on their own.
The Health Insurance Act is, however, applicable to self-employed persons as well as employees. The Social Insurance Institution (Kela) may pay self-employed persons maternity, special maternity, paternity, parental, partial parental, special support, rehabilitation and sick pay allowances. The basis for a self-employed person’s daily allowance is the earned income of the self-employed persons’ pension insurance. Consequently, the Social Insurance Institution (Kela) may pay a daily allowance to a self-employed person with a self-employed persons’ pension insurance although the person has no taxable income. The position of the self-employed person in the business affects his/her benefits and compensations.