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 and parenthood allowances for the self-employed
The sickness allowance and the parenthood allowances (maternity allowance, special maternity allowance, paternity allowance and parental allowance) paid by Kela are determined based on your annual income.
The annual income for self-employed persons includes the confirmed income under the Self-employed Persons’ Pensions Act (YEL) for the 12-month reference period prior to the calendar month that precedes the start of your allowance.
The annual income does not include wage income from one’s own company or income from self-employment. If the confirmed income under the Self-employed Persons’ Pensions Act (YEL) has changed during the reference period, the average confirmed income is used.
If you are both self-employed and in paid employment outside your own business, both these income sources are used as a basis for calculating the allowance.
Use Kela’s calculator to calculate your sickness allowance and parenthood allowance.
If you become seriously ill, you can apply for a cash rehabilitation benefit or a disability pension.
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 2020, the required annual confirmed income under YEL is 13,076 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.