Insure your self-employment to protect yourself and your family

As you know, life as an entrepreneur involves many different stages. Your pension insurance impacts many of them. Despite its name, it is not just about your pensions – it also affects your social security. Read more about how you can protect yourself and your family!

 

Six things you should know about pension insurance when you work in your own business

You must take out pension insurance under the Self-employed Persons’ Pensions Act if you work in your own business and you earn more than 8,261.71 euros per year for that work (in 2022). Your pension insurance affects your:

1. sickness allowance
2. parental allowance
3. rehabilitation and retraining
4. pension
5. family’s financial security if you pass away, and
6. taxation (you get a tax deduction for your pension contributions).

Inka Ikonen,
entrepreneur in the media industry

“My pension insurance determined how much my parental allowance was. Thanks to my insurance, I was able to combine family life and self-employment. It’s staggering how great a risk many entrepreneurs take when they choose to pay the minimum insurance contribution. It affects so many aspects of life.”

Inka Ikonen, entrepreneur in the media industry & journalist:

My pension insurance affected my parental allowance. Thanks to the insurance, I was able to combine family life and self-employment. It’s staggering how great a risk many of my fellow entrepreneurs take when they choose to pay the minimum insurance contribution. It affects so many aspects of life.

I’ve just returned to work full time after a year of partial parental leave and childcare leave. Because of my pension insurance, I wasn’t forced to work during my parental leave. I had some savings tucked away, but thanks to my insurance I hardly needed to touch that money.

My pension insurance also allowed me to take the time I needed to recover from a difficult birth. You never know how smooth giving birth will be or how you’ll recover from it. I received some commissions while I was on parental leave, and I considered taking them on. Encouraged by my husband, though, I was able to turn them down since my own recovery was more important and since my pension insurance was there to protect me. If it hadn’t covered my expenses, I would have had to work while still in poor health. At worst, it could have stood in the way of my recovery and ability to work.

My pension insurance let me focus on my baby and my new situation in life. Being on parental leave was a unique life experience. Marvelling at the little things in life is important, and it was so exiting to do so many things for the first time with my child. It was also a learning experience for me – I discovered much about myself, my marriage and how we became a family.

Since I started my own business, I have taken my pension insurance seriously – as part of risk management. With proper insurance, I have been able to focus on my business and expand it. I also save for a rainy day. But if I were to take on full responsibility for my pension insurance by, for example, putting my money in investments only and paying minimum insurance contributions, I couldn’t be sure of the outcome. I would also have to pay tax for that money once again, whereas my pension contributions are tax deductible.

In a sense, my pension insurance is also my life insurance: it secures my and my family’s income and offers us peace of mind.”

Nasim Selmani,
entrepreneur & participation specialist

“My pension insurance greatly affected my sickness allowance. I realised how important my pension insurance is when my shoulder started to act up and I had to take sick leave after an operation.”

Nasim Selmani, entrepreneur & participation specialist:

My pension insurance greatly affected my sickness allowance. I realised its significance when my shoulder started to act up and I had to take sick leave after surgery.

When I started my business, I didn’t understand how important my pension insurance is. Only two months into my business and with a customer booked in for the rest of the year, I dislocated my left forearm in the last football game of the season. I totally panicked! Is this for real – as soon as I launch my business I break my arm and can’t work?

You hear a lot of scary stories about how self-employed persons are on their own and without any protection, and I was devastated about my bad luck so early in the game. I arranged my work so that I wouldn’t have to write and took painkillers to manage everything else. Fortunately, my customer was also very understanding.

But a year later, my shoulder started to act up. At that point, I had already learned more about my pension insurance. In the summer, I realised that my shoulder had to be fixed and I was operated on in the autumn. Thanks to my insurance, I could claim a daily allowance and take sick leave. It took me 10 minutes to claim compensation – it couldn’t have been any easier!

At the time of the operation, I was already working in another company that I had founded together with some other people. My daily sickness allowance, which was based on my insurance contribution, allowed me to go on sick leave. My company could also pay me less for that month since I was working less. That way, my pension insurance helped not only me but the whole company.

As newly self-employed, you may not be able to afford high insurance contributions. If you continue your self-employment for a longer time, though, it is worthwhile making long-term plans. Although it seems far off, keep your retirement in mind. I hope I get to enjoy retirement one day, too, and that I won’t have to regret paying too small pension contributions when I was younger.

I enjoy the freedom and the responsibility that I have working in my own business. I also like to see the results of my work. I want to do things that matter and help people.”

Maijaliisa Halonen,
entrepreneur, physiotherapist & supervisor

“When I was unable to continue working as a physiotherapist after my accident, vocational rehabilitation and retraining helped me steer my business in new directions.”

Maijaliisa Halonen, entrepreneur, physioterapist & supervisor:

“When I was unable to continue working as a physiotherapist after being in an accident, vocational rehabilitation and retraining helped me steer my business in new directions.

In 2012, I took out the garbage. Stepping onto the frozen deck, I realised I was going to fall. I grabbed the railing and my hand got stuck between two boards. My right shoulder was displaced, and I had to take sick leave. Later, my shoulder required surgery and my back started to act up, as well – all because of the fall. I had ended up in a vicious circle. I started thinking about what I could do that would not require me using my body so much. Something involving my mind instead.

I was worried about the future and thought about retraining. I checked the website of my earnings-related pension insurance company for more information. On a Sunday I found an ad about supervisor training at the University of Helsinki. The application deadline was the following day. I called the university immediately and heard that there was one free spot left. I did the video interviews, and it wasn’t long until, with my plastered hand, I went to Helsinki and began my studies. My earnings-related insurance company paid my accommodation, trips and a daily allowance. Otherwise, I wouldn’t have been able to do it.

For two and a half hears, I went to Helsinki for a few days each month to study, in addition to doing online courses. I found studying really rewarding. I also participated in Kela’s rehabilitation. Fortunately, my hand recovered. My body was thankful that I had something else to do besides the hard work of a physiotherapist. The period of study did me well and, thanks to it, my working life has continued. Now I do both: work as a physiotherapist and do supervising and coaching. In my work, I see tired and aching people. Many of them think “I’ll study once I’m retired.” I have tried to encourage them to seize the day and study now!

Learning and retraining have always been lifelines for me. If I’m not challenged, I go stale. The company I am working in now is my sixth company. I guess it’s part of my nature: I can’t stay put but have to constantly move forward.

I enjoy being an entrepreneur because I get to do things my way. I am not bound by a referral that tells me to focus on just one part of the body. Instead, I can take a holistic approach in my work.

I think my pension insurance must be at a reasonable level to offer me protection in the event of illness or unemployment. It offers security.”

Virpi Carew,
pensioner & former hairdressing entrepreneur

“Being retired, I see pension insurance for the self-employed from a totally different angle. The pension I get is constantly present in my everyday life as my main source of income. It will be there for me for the rest of my life.”

Virpi Carew, pensioner & former hairdressing entrepreneur:

Being retired, I see pension insurance for the self-employed from a totally different angle. The pension I get is constantly present in my everyday life as my main source of income. It will be there for me for the rest of my life.

In 1969, I graduated from the Helsinki hairdressing school and worked in hairdressing for 50 years, 35 of which in my own business.

I left the countryside and moved into the city when I was 15. My aunt encouraged me to go into hairdressing. “Think about it – when you have kids, you can work from home”, she said. That’s exactly what I did, and I liked it a lot! I was able to work in peace, offer personal service to my customers while being close to my two children. Physically, working as a hairdresser is hard, but it is also very rewarding. I’ve never regretted my decision!

I admit I was shocked when I found out what my pension would be. My accountant used to warn me of the low pension contributions I paid. At first, I couldn’t afford to pay more. But now as a pensioner, I realise that I could have paid higher contributions. But it’s a good thing that the law requires you to take out this insurance. It protects. Otherwise, many would wind up with an empty bag. When you have insurance, you’re guaranteed a pension; it gives you security in life.

I retired little by little, first working for three days a week, then one day a week. When you’re on old-age pension, you can work for as much as you like or feel up to. This way I was able to save some money. For many, retiring is difficult. If you suddenly stop working at age 63, before you’re actually old, you may end up feeling useless.

Now I enjoy retirement to the full. I have time to do whatever I want: go out for walks in the forest, pick berries and mushrooms. I also look after my grandchildren and exercise three times a week. I go to art exhibitions with my friends. I have lived a rich life in so many respects and have always believed that in the end, life wins.”

About the campaign Entrepreneur – protect yourself and your family

We offer easy-to-understand information on pension insurance for you who work in your own business. Our goal is to help you know what your pension insurance is all about and how it affects other aspects of your life.

The campaign is arranged by the Finnish Centre for Pensions and all earnings-related pension insurance companies.

Entrepreneur – you can take out pension insurance with any pension insurance company or industry-wide pension fund (if there is one in your field). All pension insurance companies charge the same pension contribution for the same amount of income from self-employment.

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