The Government has reached an agreement on the reform of the pension system for entrepreneurs. The reform is expected to enter into force at the beginning of 2028.
The reform allows entrepreneurs to decide for themselves whether their pension contributions and the benefits based on them will be determined by their taxable earned income or the currently used YEL income method.
In the future, however, the calculated YEL income will have to be at least 50 per cent of the taxable earnings of the entrepreneur. This 50 per cent minimum condition for YEL income will enter into force gradually throughout the transition period between 2028 and 2032.
Earned income dividends will not be taken into account in the determination of the YEL income.
“In the future, entrepreneurs will be able to pay pension contributions according to their actual income. This will create clarity as well as a certain degree of flexibility, as pension contributions will more closely reflect the development of the entrepreneur’s income. There are many models like this in use around the world, and the experiences from them have generally been positive”, says Staffan Åberg, Director for Pension and Insurance Services at Veritas.
According to the preliminary estimate of the Finnish Centre for Pensions and the Ministry of Finance, pension contributions would decrease for nearly 40 per cent, remain unchanged for more than 40 per cent and increase for 20 per cent of entrepreneurs.
Flexibility makes everyday life easier
The Government also proposes that YEL contributions could be paused while receiving sickness allowance and that the reduction flexibility of YEL contributions would be increased to 25 per cent. At present, YEL contributions can be reduced temporarily by 10–20 per cent. The payment flexibility would replace the current discount for new entrepreneurs.
“Flexibility makes everyday life easier for entrepreneurs when, for example, you don’t have to worry about YEL contributions when you are sick. In principle, lower contributions also mean weaker social and pension security, but the changes allow for flexibility in difficult situations.”
In addition, the Government intends to launch preparations for the funding of YEL contributions.
“Initiating funding is not easy, but you have to start somewhere. It is a method that would also help to boost entrepreneurs’ confidence in the pension system.”
The reform will enter into force at the earliest in 2028, since the proposed model also requires legislative changes. We will monitor the progress of the reform work and keep our customers informed of any possible changes.
Also read:
- Press release of the Ministry of Social Affairs and Health (in Finnish): Government agreed to reform the pension system for entrepreneurs (23.4.2026)
- Press release of the Government: Orpo Government: Uncertain times call for measures to build confidence and boost growth (22.4.2026)
