As a self-employed person, your insurance under the Self-employed Persons’ Pensions Act (YEL) affects not only your pension but also your social security benefits if you get ill, become unemployed or go on parental leave. In other words, the insurance under YEL does not provide your pension in the future but it also secures your income before you reach your retirement age.
Your social security is based on your confirmed income under YEL. Kela and the unemployment funds of the self-employed use the confirmed income under YEL when they calculate the benefits of the self-employed. That is why it is good to think about how your confirmed income under YEL affects also your social security.
Sickness allowance for the self-employed
As a self-employed person, you can apply for a sickness allowance from Kela to cover your loss of earnings while you are sick. The sickness allowance of the self-employed is determined based on your confirmed income. It is paid for a maximum of 300 weekdays.
In 2019, the sickness allowance is based on your confirmed income under YEL for 2017, adjusted with the wage coefficient. If you so request, your sickness allowance can also be based on your income from self-employment during 6 months before you get ill, providing that it, after being converted into an annual income, is 20% higher than your taxable income from self-employment for 2017.
If you become seriously ill, you can apply for a cash rehabilitation benefit or a disability pension. They are both determined based on your confirmed income under YEL.
Parenthood allowances of the self-employed
You are entitled to parental allowances paid by Kela. The allowances (maternity allowance, special maternity allowance, paternity allowance and parental allowance) are determined in the same way, based on your confirmed income under YEL of your pension insurance.
In 2019, the parenthood allowances are based on your confirmed income under YEL for 2017, adjusted with the wage coefficient. You can ask Kela to calculate your daily allowance also based on your income from self-employment during 6 months before your parental leave starts, providing that it, after being converted into an annual income, is 20% higher than your taxable income from self-employment for 2017.
Use Kela’s calculator to calculate your parenthood allowance.
Self-employed person’s unemployment security
If your business activities end, you can get an unemployment benefit (earnings-related daily allowance, basic daily allowance, adjusted unemployment benefit or labour market support). If your entrepreneurship ends, or you stop working in your own company, register as an unemployed jobseeker with an Employment and Economic Development Office. As a rule, to get an unemployment benefit, you must end your entrepreneurship.
You may qualify for a daily allowance linked to your confirmed income under YEL if you meet the employment conditions of a self-employed person. The conditions are that you have worked as a self-employed person for at least 15 months during the 48 months before your unemployment, that you have been insured with an unemployment fund for self-employed at the same time, and that your confirmed income under YEL has been higher than the annually set limit. In 2019, the required annual confirmed income under YEL is 12,816 euros.
If you are not a member of an unemployment fund, you can get a basic daily allowance or labour market support paid by Kela.