The TyEL insurance contribution is calculated based on the payroll sum paid by the employer to employees between the ages of 17 and 67. The TyEL insurance contribution rate is confirmed annually by the Ministry of Social Affairs and Health. In 2021, the TyEL basic contribution rate is 24.8% of the employee’s salary or wages.
In 2020, the TyEL basic contribution rate was 25.3% of the employee’s salary or wages. Due to the exceptional situation brought on by the coronavirus, however, the percentage for the employers’ pension contributions was reduced to 22.7% of the payroll for the period of 1 May–31 December 2020.
Employers withhold the employee’s share of the contribution in connection with the payment of the salary or wages. TyEL insurance contributions are invoiced on the basis of the payroll information reported to the Incomes Register.
The amount of the TyEL contribution is affected by the client bonuses and the actual realised payroll sum. More information about the contribution categories and discounts for large employers is available below.
Employee’s pension contribution
The employee’s contribution is determined by the employee’s age and salary. The employee share of the contribution is:
Employers and companies are responsible for the TyEL insurance contributions as well as other social security contributions. Check the contributions for 2021.
How does the payroll sum affect TyEL contributions?
If a company’s total payroll sum exceeded 2.13€ million in 2019, the employer will contribute directly to the expenses for any disability pensions granted to its employees. The total payroll sum includes the payroll amounts for all the company’s TyEL insurance policies, also for those employees who may, possibly, be insured with a pension provider other than Veritas.
There are 11 contribution categories, each with its own rates for the disability contribution or discount. The contribution category is determined by the company’s disability statistics for the previous two years. The higher the disability pension expenditure, the higher the company’s contibution category. An employer whose payroll sum exceeded 34€ million in 2019 shall pay the liability component for disability pensions in full.
Read more about the insurance contribution of large employers in our brochure.
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TyEL insurance contribution discounts
Large employers are granted discounts on their TyEL insurance contributions. The discounts for large employers are determined in the same way regardless of the pension provider.
The TyEL insurance contribution includes a group discount component intended to cover operating costs for the insurance and compensation activities of the pension provider. If the annual payroll sum for the insurance policy exceeds EUR 5 million, the employer will receive a discount for large payrolls. The greater the employer’s payroll sum, the higher the discount. The discount of companies belonging to the same group is determined on the basis of the payroll sum of the entire group. The combined payroll sum of TyEL insurance policies for the group only includes those companies whose TyEL insurance is provided by Veritas. The discount for large payrolls is calculated annually on the basis of the payroll for the previous financial year and applied to the contribution in the spring.
If the insurance policy is transferred from one pension provider to another, the discount for the year of transfer is paid by the former pension provider. Correspondingly, the pension provider for the new policy shall credit the company with the first discount for large payrolls in the year following the initial year of the policy.
Premium loss discount
The TyEL insurance contribution includes a premium loss component used to cover credit losses caused by unpaid insurance contributions to the pension provider. A premium loss discount is applied to the contributions of large employers.
The temporary reduction of contributions 2020 will be compensated by higher TyEL contributions in 2022 – 2025
Due to the corona pandemic, an amendment to a law was made to reduce the employers’ TyEL insurance contributions by 2.6 percentage points for the period of 1 May – 31 December 2020. This temporary reduction of contributions will be compensated by higher TyEL contributions in 2022 – 2025. According to the law, in 2021, the Ministry of Social Affairs and Health will decree the amount of the deficit caused by the reduced contributions. Increases of the TyEL insurance contributions that are to be made in 2022 – 2025 must together equal the above-mentioned amount of deficit. The part of the deficit that has not been amortized, is annually raised with the technical rate of interest. In practice, the average TyEL contribution percentage will be set somewhat higher in 2022 – 2025, in order to cover the deficit in total by the end of 2025.