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 2023, the TyEL basic contribution rate is 25.30 per cent of the employee’s salary or wages without the company-specific expense loading. The expense loading fee will be determined on the basis of the individual customer company’s payroll.
In 2022, the TyEL basic contribution rate was 25.85 per cent of the employee’s salary or wages.
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 2023.
How does the payroll sum affect TyEL contributions?
If a company’s total payroll sum exceeded €2.198 million in 2021, 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 contribution category. An employer whose payroll sum exceeded €35.2 million in 2021 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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Expense loading discount
From the start of 2023, the expense loading component of TyEL insurance contributions will be linked to the specific pension provider in question. The expense loading component is intended to cover the business expenses of the pension insurance company. Making the expense loading component company-specific will bring transparency to TyEL insurance contributions.
The expense loading fee will be determined on the basis of the individual customer company’s payroll. The larger the company’s payroll, the smaller the fee. If a company belongs to a group that is insured by Veritas, the fee will be determined on the basis of the payroll for the entire group.
The expense loading fee is set to correspond as closely as possible to Veritas’ estimated business expenses. The fee is smaller than the earlier general fee. Veritas’ expense loading fee is collected as part of the pension contributions paid from salaries. The expense loading discount is taken into account automatically in contributions and will be shown in the invoice as a smaller overall payment percentage.
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 per cent 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 decreed 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.