The Government submitted the YEL reform for Parliamentary consideration on 8 October 2026. Upon the approval of Parliament, the reform will enter into force on 1 April 2028. Entrepreneurs can, however, already choose their preferred income model as of 1 January 2028 to be applicable from 1 April 2028.
The aim of the reform is, in particular, to lower YEL payments for low-income entrepreneurs and to give entrepreneurs more freedom of choice.
“The reform is a step in the right direction. Entrepreneurs’ situations can be very different, so it’s good to have options for determining YEL income”, says Staffan Åberg, Director for Pensions and Insurance Services at Veritas.
What will change?
The key changes for entrepreneurs under the YEL reform concern the determination of their YEL income. According to the reform proposal, entrepreneurs would be allowed to choose their preferred income model from the beginning of 2028. There are two model options to choose from, the earned income model and the overall assessment model. The entrepreneur’s choice is then valid for three years at a time.
In the earned income model, the pension contributions of the entrepreneur and the benefits paid on the basis of them would be determined entirely according to their taxable earned income. Earned income information would be obtained either from the most recently confirmed tax information or from the Incomes Register. In the earned income model, the pension company reviews the YEL income level annually.
The overall assessment model is a combination of the current model and the proposed earned income model. The overall assessment model is based on the currently calculated YEL income. After the transition period, the calculated YEL income will be required to be at least 50% of the taxable earnings of the entrepreneur. During the transition period, the YEL income amount will increase gradually by five percentage points each year, starting at 30 per cent in 2028, until it reaches the required the 50 per cent level. In the overall assessment model, the pension company also reviews the YEL income level annually.
The YEL insurance obligation of an entrepreneur will continue to be assessed on the basis of an overall assessment, not solely on the basis of earned income information.
YEL insurance can be suspended for a longer period of absence
An entrepreneur can suspend their YEL insurance for a period of at least three months while receiving sickness or parental allowance if, during that time, their work contribution would fall below the minimum limit for YEL insurance.
Payment flexibility will replace the current discount for new entrepreneurs
The reform grants entrepreneurs increased flexibility by enabling them to reduce their YEL contributions by 25 per cent instead of the previous 20 per cent. The increased flexibility would replace the current discount for new entrepreneurs. Entrepreneurs that have already moved past the initial stage of entrepreneurship would also have the possibility to temporarily reduce their contributions. Discounts that have already been granted to new entrepreneurs will remain unchanged.
Payment flexibility allows for lower contributions and pension accumulation for a temporary period. Social security benefits paid on the basis of earned income remain unchanged throughout the period of payment flexibility.
What do entrepreneurs need to do now?
Entrepreneurs are not required to take any action at this point.
The legislative proposal has only just been submitted to Parliament and the current YEL income system is still in force.
“Entrepreneurs don’t need to worry about the reform or make any decisions at this stage. We will follow the law’s progress and inform you of any changes in time. When it comes time to make a choice, your dedicated insurance advisor at Veritas will help you compare the options and consider what they would mean for your situation”, says Åberg.
