Pension system in Finland
If you’re starting a business in Finland, you might be wondering why it’s mandatory for entrepreneurs to take out pension insurance. Or for employers to get pension insurance for their employees. We’ll help you understand the Finnish pension system and the insurances – dive in below.
What is the pension system like in Finland?
There are two main types of pensions – the national pension and the earnings-related pension. The latter is a pension that you accrue based on your work. This applies to both employees and entrepreneurs. The national pension and its supplement, the guarantee pension, are there to secure basic livelihood in case the earnings-related pension is very small or doesn’t exist. Pensions are a part of social security in Finland, and voluntary pension insurances are relatively uncommon.
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I'm new in Finland – I want to understand the basics
InfoFinland is a website published by the City of Helsinki, where you can find basic information about the pension system in different languages, including Estonian, Russian and Somali.
Show me the basics of Finnish pension system (infofinland.fi) -
What do I need to know about the earnings-related pensions?
At Työeläke.fi, a service offered by the Finnish Centre for Pensions, you can find all the information you need regarding the earnings-related pensions.
I want to know more about earnings-related pensions (tyoelake.fi)
One of the best pension systems in the world
The Finnish pension system might not be all that simple, but it is reliable. In fact, Finland has one of the best pension systems in the world. The Mercer Global Pension Index ranks Finland’s pension system number one in the world for transparency and reliability, and number seven in the overall score.
Don’t take our word for it: Check out the the Mercer Global Pension Index yourself (etk.fi)
What is Ilmarinen?
We are Finland’s largest and oldest private earnings-related pension insurance company.
We have taken care of our customers’ pensions since 1961, and as a mutual pension insurance company, we are wholly owned by our customers.
Our task is to ensure that our customers receive the pension they earned from work.
We offer employees’ and self-employed persons’ pension insurance for employers and entrepreneurs operating in Finland.
Earnings-related pension encompasses both employees and entrepreneurs. Self-employed people are insured under YEL, which they take out for themselves. Employees are insured under TyEL, an insurance which their employer takes out. These insurances are a part of the Finnish social security, and they are mandatory.
YEL – pension security for the self-employed
If you are an entrepreneur, then YEL insurance is the basis for both your pension and social security. With each insurance contribution, you grow your pension and improve your other social security benefits. The insurance is mandatory for entrepreneurs, and you cannot replace it with a voluntary pension insurance.
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Do I need YEL insurance?
If you meet the five conditions of YEL insurance, then you must take out the insurance.
Find out if you need the YEL insurance -
How much does YEL insurance cost?
The insurance contribution is a certain percentage of your YEL income. As the insurance is statutory, the cost is the same in all pension insurance companies.
Find out more about the price of the YEL insurance -
Help! I need a guide
Feeling confused? Not to worry – we have a guide for you. Order our free guide to YEL insurance and you’ll be a pro in no time.
Order the guide
TyEL – pension security for your employees
If you employ at least one person on a permanent basis and pay them a certain minimum amount in wages, you will need to take out TyEL insurance. Even if you are only a temporary employer, you have to pay the insurance contributions.
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When and how do I insure my employees?
So, you are in charge of your employees’ pension cover. But how do you know who needs to be insured? And how can you best take care of it?
Read more about insuring an employee -
How much does TyEL insurance cost?
The TyEL contribution is a percentage of the salaries you pay to your employees. But you do not pay the contribution alone; employees also pay their share of it.
Find out more about TyEL contributions -
I’m hiring my first employee – what do I need to know?
When you hire an employee, you need to take care of their pension cover. In some cases, you are also responsible for their other social security.
Find out more about hiring your first employee
What kind of pension security do I get?
The pension system is meant to provide income security in old age, as well as in the event of disability or the death of a family's breadwinner. This means that the pension security entails, for example, old age pension, disability pension and a survivor’s pension.
Read more about the different types of pensions
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When can I retire?
You can retire on an old-age pension flexibly based on your birth date.
Read more about when you can retire -
What if I move away – will my pension be paid abroad?
Your pension or rehabilitation benefit can also be paid to your foreign bank account.
Read more about the payment of pensions -
Can I receive a pension from abroad?
When you work abroad, your pension and other benefits are determined based on the legislation of the country in which you work.
Read more about accrual of pension from abroad