Earnings-related pension contributions for 2021 confirmed
The Ministry for Social Affairs and Health has confirmed the earnings-related pension insurance contributions for 2021.
The average TyEL contribution collected next year will be 24.4% of the payroll. The average contribution takes into account client bonuses and other discounts. Client bonuses are estimated to amount to an average of 0.2% of the payroll (this year 0.7% of payroll). The earnings-related pension insurance contribution percentage under the Self-Employed Person’s Pension Act will be 24.10% and the increased contribution for those aged 53–62 will be 25.60% next year. These contribution percentages are the same as in 2020.
Temporary employer’s contribution
24.8% (25.3% between 1 Jan and 30 Apr and 22.7% between 1 May and 31 Dec 2020)
Contract employer’s contribution
The TyEL basic contribution will be 24.8% (25.3% between 1 Jan and 30 Apr and 22.7% between 1 May and 31 Dec 2020).
In addition, the client bonus that will be calculated in spring will be deducted from the employer’s contribution. Due to the coronavirus pandemic, the TYEL contribution was reduced by 2.6%. The reduction lowers the client bonuses for 2021.
Large employers
Large employers can check their own insurance contribution percentage by logging in to our online service.
The company’s disability pension contribution in accordance with the contribution category based on its disability risk affects the contribution of medium and small companies. A company is a large employer if its payroll in 2019 was more than EUR 2,125,500.
Large companies’ contribution is additionally reduced by the contribution loss discount. If the payroll of a company or group exceeds EUR 5,000,000, the contribution also decreases due to the expense loading component’s discount for large payrolls. The estimates on the discounts are available in the online service.
Employee’s pension contributions
An employee’s shares are
7.15% (7.15% in 2020) of the salary for those aged 17‒52
8.65% (8.65% in 2020) of the salary for those aged 53‒62
7.15% (7.15% in 2020) of the salary for those aged 63‒67.
The employer’s share is on average 16.95% of the salary (16.95% between 1 Jan and 30 Apr and 14.35% between 1 May and 31 Dec 2020).
Client bonus and discount for large payrolls
The client bonus and the discount for large payrolls will be calculated in spring 2021 and taken into account in future TyEL invoices. The estimates of the client bonus and the discount for large payrolls are available in the online service.
Average earnings-related pension contribution, % of salaries
| 2021 | 2020 | |
|---|---|---|
| Old-age pension | 3.5 | 3.5 |
| Disability pension | 1.2 | 1.0 |
| Pooled component | 19.1 | 19.9/17.3 |
| Other components | 0.8 | 0.7 |
| Bonuses | -0.2 | -0.7 |
| Average contribution | 24.4 | 24.4/21.8 |
The disability pension component included in the contribution will rise to an average of 1.2% of the payroll (1.0% in 2020). Client bonuses will decrease, but correspondingly, the pooled component will also be reduced.
Earnings limits
The lower limit for the obligation to take out TyEL insurance will be EUR 61.37 per month in 2021. However, all wages and salaries, including those that fall below the lower limit, must be reported to the Incomes Register.
The earnings limit for a temporary employer is EUR 8,790 in six months. If the amount is exceeded or if the employer has permanent employees, the employer must apply for TyEL insurance. The employer then receives an insurance policy number and concludes an insurance contract with us.
It is a good idea to take out TyEL insurance well before calculating wages, because the TyEL insurance number, i.e. pension policy number must be reported to the Incomes Register.
Self-employed person’s YEL contribution for 2021
Self-employed person’s YEL contributions will remain on the same level compared to 2020.
The YEL contribution for persons aged under 53 and over 62 will be 24.10%, and 25.60% for those aged 53–62.
The YEL income will be increased with a wage coefficient (1.465), which will increase the income by 1.3% compared to 2020 (1.446).
In 2021, the lower limit for the YEL income is EUR 8,063.57/year and the upper limit is EUR 183,125/year. A self-employed person can be covered by unemployment security if his or her YEL income is at least EUR 13,247 next year. The YEL income is adjusted annually with the wage coefficient.
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