Earnings-related Pension Provision for Employers and the Self-employed

2015 Earnings-related Pension Provision for Employers and the Self-employed HOW DO I ARRANGE PENSION INSURANCE? HOW MUCH DOES IT COST? Finnish Centre for Pensions ELÄKETURVAKESKUS

Finnish Centre for Pensions Service centre for the Finnish statutory earnings-related scheme Customer service and visiting address: Kirjurinkatu 3, Itä-Pasila, Helsinki Postal address: FI-00065 ELÄKETURVAKESKUS, Finland Puhelin: 029 411 20 Pensions advice: +358 29 411 2801 International matters: +358 29 411 2818 Insurance of work abroad: +358 29 411 2816 YEL advice for the self-employed: +358 29 411 2804 Fax: +358 9 148 1172 www.etk.fi www.tyoelake.fi Booklets published by the Finnish Centre for Pensions Earnings-related Pension Provision for Employers and the Self-Employed (in Finnish, Swedish and English) Pension Provision for Employees and the Self-employed (in Finnish, Swedish and English) Applying for Pension from Abroad (in Finnish, Swedish, English, Russian and Estonian) The booklets are free of charge and available from the Finnish Centre for Pensions, Kela, Employment and Economic Development Offices, as well as the Centre for Economic Development, Transport and the Environment.

Introduction 4 Earnings-related insurance covers all wage labour 4 Employees Pensions Act (TyEL) 5 How do I arrange insurance for my employees? 5 Employer with an insurance contract 5 Occasional employer 6 Private households as employers 6 Pension contributions paid for employees 6 Earnings-related insurance for the self-employed 7 Self-employed Persons Pensions Act (YEL) 7 The self-employed take out their own YEL insurance 8 Pension contributions of the self-employed 8 Earnings form the basis of your 8 Insurance based on YEL in different company forms 9 Who counts as a family member? 10 Flexibility in the contribution of the self-employed 10 Discount on insurance contribution for the newly self-employed 11 Unpaid insurance contributions 11 Pension insurance for grant recipients 12 Pension insurance for foreigners working in Finland 12 Employee from an EU/EEA country or a social security agreement country 12 Possibility of exemption for employee from a non-agreement country 13 Insurance for posted employees 13 Working in an EU/EEA country, Switzerland or a social security agreement country 14 Working in a country where neither EU regulations nor social security agreements apply 14 Salary for insurance purposes for work abroad 15 Shortcut to information 16 Supplement 18

4 Earnings-related Pension Provision for Employers and the Self-employed 2015 Introduction If you want to know more about insurance for persons working for a private employer or for the selfemployed, this booklet is for you. It contains instructions on your obligations as an employer to arrange insurance for your employees, and on how you should arrange your own provision if you are selfemployed. The booklet follows currently valid legislation under the Employees Pensions Act (TyEL) and the Self-Employed Person s Pensions Act (YEL), but should not be regarded as a text of law. More information about insurance is available from the Finnish Centre for Pensions or the earnings-related providers, as well as online at www. tyoelake.fi. For more information in English on the forthcoming reform that will take effect in 2017, please go to the website of the Finnish Centre for Pensions at www.etk.fi, section The Pension System > Dynamic Pension Scheme > Pension Reform in 2017. If you are employed by the State, a local government or the Church, you are covered by public-sector acts. Keva, which manages the provision of local government, State and Church employees as well as the employees of Kela, provides more information on these acts. This booklet also contains information on insurance for foreign employees working in Finland and Finnish employees posted abroad. The Supplement at the end contains information on insurance contributions, indexes and taxation in 2015. It also features tables on the national, the reduced surviving spouse s as well as social benefits for which accrues. The amounts in this booklet are in the index level of 2015. Earnings-related insurance covers all wage labour If you work for a private-sector employer, your work is insured according to the Employees Pensions Act (TyEL). If your work is based on the Merchant Shipping Act, your work is insured with the Seafarer s Pension Fund in accordance with the Seafarer s Pensions Act (MEL). If you work as a self-employed person, your work is insured according to the Self-Employed Persons Pensions Act (YEL). If you are a farmer, fisherman, reindeer herder or a researcher or artist working on a grant, you must insure your work according to the Farmers Pensions Act (MYEL) with Mela. In addition to earnings-related insurance, your employer is also liable to pay your workers compensation contribution, unemployment insurance contribution, group life

Earnings-related Pension Provision for Employers and the Self-employed 2015 5 insurance premium as well as your social security contribution. Employees Pensions Act (TyEL) The liability to take out insurance starts from the beginning of the month following the month of your employee s 18th birthday, and ends at the end of the month during which your employee turns 68. You must also pay earnings-related contributions for retired persons that you have employed who are under the age of 68, because new will accrue for work during retirement. TyEL covers work carried out by your employee under an employment contract, for which you pay the employee earnings of at least EUR 57.10 per calendar month. Earnings mean wages or other remuneration for work. You must insure remunerations for positions of trust under TyEL if you pay the remuneration and the person in the position of trust is employed by you. In other cases, taking out insurance for positions of trust is voluntary. How do I arrange insurance for my employees? As an employer, you can arrange provision for your employees with any provider either as an employer with an insurance contract or as an occasional employer. Employer with an insurance contract If you continually employ at least one person, or if the salaries you pay out exceed EUR 8,178 over a six-month period, you are an employer with an insurance contract. You will have to arrange provision for your employees by taking out TyEL insurance with a insurance company, a company fund or an industry-wide fund within the month following the payment of the wage. You may insure all of your employees with a single insurance. You may also take out parallel insurance policies for different groups of employees, as determined by the insurance terms and conditions. As an employer with an insurance contract, you will report the earnings of your employees to your provider either through an annual or a monthly notification. If you choose the annual notification, you will report the annual earnings for continuing employment contracts for the previous year to your provider by the end of January. However, the earnings for employment contracts that have started and ended during the year should be reported to your provider at least on a quarterly basis. If you use monthly notifications, you will report the employees and their earnings to your provider on a monthly basis. In that case, you do not have to submit a separate annual notification.

6 Earnings-related Pension Provision for Employers and the Self-employed 2015 Occasional employer You are an occasional employer if you do not continually employ anyone and if the wages you pay out over a six-month period amount to less than EUR 8,178. You do not have to sign a separate insurance contract with a provider. Instead, you will report the employees and their wages and pay the insurance contributions on a monthly basis to a provider of your own choice. The contributions have to be paid by the 20th of the month following the payment of the wages. Private households as employers If you hire, for instance, a renovator, a child-minder, a cleaner or a musician for family celebrations, your household is considered an employer and is under the obligation to pay contributions. A household has to pay contributions for wages paid to all persons aged 18 or above if the monthly wage paid exceeds EUR 57.10. The duration of the employment contract is of no significance. You must also take out insurance for retired persons that you have employed who are under 68 years of age, since new will accrue for work done during retirement. The age limits relating to the insurance obligation are specified above in the section Employees Pensions Act (TyEL). All employees are to be insured under TyEL. The insurance may be taken out with any insurance company. The insurance company you choose will give you advice on how to arrange insurance and, for example, whether the contributions must be paid according to the rules governing occasional employers or employers with an insurance contract. Other statutory fees that an employer has to pay are presented (in Finnish and Swedish) at www.palkka.fi. Pension contributions paid for employees Whether you are an employer with an insurance contract or an occasional employer, the basis for the contribution is the wage that you pay to your employee. If you are an employer with an insurance contract, the total wage bill will affect the bases of the contribution. The insurance contribution according to TyEL is determined on the same grounds in all insurance companies. Both the employer and the employee pay an earnings-related insurance contribution. As the employer, you will pay the total insurance contribution to the provider and are responsible for the payment being made. You have the right to deduct your employee s share of

Earnings-related Pension Provision for Employers and the Self-employed 2015 7 the insurance contribution from the employee s salary. As the employer, you will collect your employee s contribution from the gross salary, from which taxes are also withheld. The gross salary is the employee s salary to which any possible benefits in kind have been added, by taxable value. The right to deduct the earningsrelated contribution in taxation has already been taken into account in the employee s withholding rate. In the case of a posting abroad, the salary for insurance purposes is the basis for the employee s contributions. The 2015 insurance contribution rates are listed in the Supplement at the end of this booklet. Earnings-related insurance for the self-employed If you are self-employed, you have to arrange provision in accordance with the Self-employed Persons Pensions Act (YEL). If you are a farmer, fisherman or reindeer herder or a grant recipient, you must insure your work based on the Farmers Pensions Act (MYEL). Part-time self-employment must also be insured. Moreover, if you are a foreign citizen living in Finland, you are obligated to insure any selfemployment taking place here. Self-employed Persons Pensions Act (YEL) According to YEL, a self-employed person carries out work generating an income in Finland and is not employed in the private or public sector when carrying out this work. Simply owning an enterprise is not a basis for insurance in itself, as actual work is required. If you are self-employed, you have to take out insurance under YEL if you are between 18 and 67 years of age your self-employment continues for an uninterrupted period of at least four months your earnings are at least the size stipulated by law. In 2015, the minimum amount is EUR 7,502 per year.

8 Earnings-related Pension Provision for Employers and the Self-employed 2015 The self-employed take out their own YEL insurance If you are self-employed, you may freely choose the provider with whom to take out YEL insurance. If you are active in certain fields you may also manage your insurance in a YEL fund within your own field. The YEL insurance is a personal insurance that covers all your selfemployment. Even if you have several different businesses, you need only one YEL insurance policy. The scope of your entire business activity is taken into account in your YEL income. You must take out YEL insurance within six months after beginning self-employment. You can insure retroactively only the current year and three previous calendar years. If you have left earlier periods uninsured, you will accrue no for those periods. Pension contributions of the self-employed As self-employed, you are personally responsible for paying your insurance contributions based on YEL. You may also be obligated to pay YEL contributions for your family members. The company in which you work as a self-employed person may also be the one responsible for the payment of your YEL contributions. Since the accrual rate is higher if you are over 53 years, your insurance contribution rate will also be higher at that age. For the first four years of self-employment, you will receive a discount on your YEL insurance contribution. The insurance contribution to be paid is determined based on your confirmed YEL income and an agebased insurance contribution rate. Your earnings will be adjusted annually with a wage coefficient. YEL insurance contributions are completely deductible in either your own or your spouse s taxation. If your company has paid the insurance contributions, it may deduct them in taxation. The insurance contribution rates are listed in the Supplement at the end of this booklet. Earnings form the basis of your The provider will confirm your YEL income based on your insurance application. The confirmed income forms the basis of both your accrued and your insurance contribution. If you fall ill, your sickness allowance will also be determined based on your confirmed YEL income. The parenthood allowance, special care allowance and rehabilitation allowance based on the Rehabilitation Allowance Act are also determined based on your confirmed YEL income. As a self-employed person, you are entitled to unemployment security if your annual earnings are at least EUR 12,326.

Earnings-related Pension Provision for Employers and the Self-employed 2015 9 The confirmed YEL income should correspond to such salary or compensation that would be paid to an outsider if another, equally qualified person were to carry out the work covered by YEL instead of you. The income should correspond to the value of your work input. The income is not determined based on the profit of your company or the reimbursement for capital investment that you have withdrawn from your company. Please consult the relevant instructions published by the Finnish Centre for Pensions when assessing your income. You should evaluate your income correctly from the beginning, as corresponding to your real work input, since the confirmed income from work during your entire period as a self-employed person will affect the amount of your future. If your work input changes significantly in either direction, your confirmed income may and should be changed. Please note that it is not possible to change your confirmed income retroactively. Turn to your provider for assistance when assessing your income. Insurance based on YEL in different company forms In addition to entrepreneurs and persons practising a profession, YEL also applies to self-employed persons owning the company through which business is conducted. However, simply owning a company is not in itself a basis for YEL insurance, since you also have to work for the company in order for YEL insurance to be obligatory. You are insured under YEL if you are: the holder of a private business name. Your spouse is also insured if he or she is working for your company a partner to a general partnership an active partner to a limited partnership a partner to a limited company in a senior position who owns alone more than 30 per cent of the company shares or more than 30 per cent of the voting rights based on the shares a partner to a limited company in a senior position and you own, together with family members, more than 50 per cent of the company shares or have, together with family members, the voting rights based on these shares.

10 Earnings-related Pension Provision for Employers and the Self-employed 2015 YEL does not apply if you are: the spouse or family member working in a partnership without being a partner a silent partner of a limited partnership. Who counts as a family member? A family member is a person in a descending or ascending line who permanently resides in the household of the self-employed person. Adopted children or adopted parents and domestic partners living in the same household with the selfemployed person are also considered family members. Married spouses are considered family members even if they do not live in the same household. The parties to a registered relationship are comparable to married spouses. Siblings are not considered family members as defined by YEL. Flexibility in the contribution of the self-employed If you are self-employed, you may raise your provision during prosperous years by paying additional insurance contributions, without an increase to your confirmed YEL income. Correspondingly, you may pay smaller contributions during less prosperous times. This is easily arranged by sending a written notification to your provider. As a self-employed person, you can raise or lower your income with a flexible payment once a year. The flexible contribution payment does not alter your confirmed income. Your confirmed income can be altered only through a separate application, but not retroactively. Your overall income for each year is determined based on your confirmed income and the raised or lowered contribution. The raised contribution may be anywhere between 10 100 per cent of your calculated annual contribution based on your confirmed income. The reduction may be between 10 and 20 per cent of your regular contribution. Reducing your YEL contribution will also reduce your future.

Earnings-related Pension Provision for Employers and the Self-employed 2015 11 The flexibility option cannot be used if you have outstanding YEL contributions. Nor can you use it during the discount period for beginning self-employment, or following the year during which you turn 62. Additional contributions or reduced contributions targeted at the calendar year preceding the start of a possible disability are not taken into account in the calculation of such a. Temporary changes to your insurance contribution are not taken into account when calculating the halved income for a possible part-time. When determining your stabilised income for a part-time, the impact of additional contributions on your earnings for the year preceding the start of your are not taken into account. For other years, any paid additional contributions will be taken into account. The downward flexibility of the income is always taken into consideration when calculating your stabilised income. A raised or lowered insurance contribution does not affect the amount of sickness allowance that you receive based on the health insurance. It is calculated based on your confirmed income. Discount on insurance contribution for the newly self-employed If you have become self-employed for the first time in 2013 or later, you will receive a 22 per cent discount on the YEL contribution for four years. If the period of self-employment ends before the four years are up, you may use the remaining discount time during a later period of self-employment. There is no time limit on the interval between the periods. Unpaid insurance contributions Unpaid contributions under YEL will decrease your. The amount of your will be reduced in proportion to your paid and confirmed contributions under YEL, separately for each period of income. If you have neglected to pay contributions for a period of time, your income from that period will amount to zero euros and no will accrue for that period.

12 Earnings-related Pension Provision for Employers and the Self-employed 2015 Pension provision of grant recipients If you are a researcher or an artist receiving a grant, you must take out insurance under MYEL. Mela provides and accident insurance for grant recipients. If you have received a grant from Finland for the purpose of artistic or scientific work lasting for at least four months, you have to take out insurance with Mela. Under certain conditions, work taking place abroad based on a grant also needs to be insured under MYEL. In order for insurance to become necessary, the size of your grant should amount to at least EUR 3,751.07 when converted to an annual MYEL income. You are under obligation to insure if you are an individual grant recipient or if you work in a collective receiving a grant. As a grant recipient, your provision is determined based on your confirmed MYEL income in the same way as for a farming entrepreneur. Your confirmed MYEL income also forms the basis of your earningsrelated workers compensation insurance, as well as of the sickness allowance under the Sickness Insurance Act and Kela s rehabilitation allowance. For further information, please contact Mela s customer service for grant recipients by telephone at +358 29 435 2695 or by e-mail at vakuutus@mela. fi. Pension insurance for foreigners working in Finland In general, work done in Finland is to be insured according to Finnish earnings-related legislation. If you are a Finnish employer, you need to insure your foreign employees who work in Finland under TyEL in the same way as your Finnish employees. A foreign employer is also obligated to arrange provision in Finland for employees working in Finland. Employees from an EU/EEA country, Switzerland or a social security agreement country As an employee, you are to be insured in Finland unless you can present a certificate stating that the legislation of some other EU/EEA Mela s customer service for grant recipients, tel. +358 29 435 2695 or e-mail vakuutus@mela.fi

Earnings-related Pension Provision for Employers and the Self-employed 2015 13 country, Switzerland or an agreement country should be applied during your employment here. If you are such an employee, posted to Finland from another country, you are to be insured in the country where the certificate was issued. Insuring in another country requires that your work in Finland is temporary and that you do not have an employer in Finland. Possibility of exemption for employees from a nonagreement country If you are a foreign employer who posts an employee from a so-called non-agreement country to Finland to work for two years at the most, you do not have to insure that employee under TyEL. The exemption does not apply to a posted employee who, immediately prior to the work starting, has been covered by Finnish social security legislation, the EU regulation on social security or an act that is applicable according to the social security agreement. By application, the Finnish Centre for Pensions may release you from the insurance obligation for a maximum of five years from the beginning of the work in Finland if you post the employee to Finland for more than two years, or when the work in Finland continues for more than two years for reasons that are impossible to predict. The prerequisite for the exemption is that you present a statement showing that the provision of the posted employee has been arranged elsewhere. Insurance for posted employees Insurance for employment abroad is affected by whether the country of employment is an EU/ EEA country or Switzerland there is a social security agreement between Finland and the country of employment; the work is performed outside the agreement countries. The EU/EEA countries and Switzerland adhere to the common rules of the EU on social security, which determine which country s social security legislation will be applied if you move from one country to another. In addition to Finland, the following countries are EU Member States: Austria, Belgium, Bulgaria, Croatia, Cyprus, the Czech Republic, Denmark, Estonia, France, Germany, Great Britain, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain and Sweden. EEA countries are Iceland, Lichtenstein and Norway.

14 Earnings-related Pension Provision for Employers and the Self-employed 2015 In addition, Finland has concluded bilateral social security agreements with Australia, Canada, Chile, India, Israel, Québec and the United States. The social security agreement between Finland and China is expected to come into force in 2015. All agreements contain rules regarding insurance. Working in an EU/EEA country, Switzerland or a social security agreement country If you are a migrant worker, the EU regulations and social security agreements ensure that you are entitled to social security benefits on the same conditions as the country s own citizens your s are paid from one country to another you are insured in only one country, that is, you pay contributions to only one country at a time you may take into account periods from other agreement countries for the requirements regarding insurance periods (for example, five years required in Germany). This makes receiving the entitlement to a easier, but your will still be determined on the basis of the work carried out in each country. The baseline of EU rules and the social security agreements is that you are insured in the country where you work. If you are posted to a foreign country on a temporary basis (for 2 to 5 years, depending on the country), you may continue to be covered by Finnish social security on certain conditions, which means that your earnings-related insurance remains in force in Finland. There are other special regulations, both in the EU provisions and the social security agreements, according to which Finnish legislation is applied to employees while they are employed abroad. For example, if you work in two or more countries, you are subject to such special regulations. In that case, or if you are posted from Finland, you have to apply for a certificate of coverage under Finnish social security from the Finnish Centre for Pensions. For more information on the preconditions for posting, special groups and how to apply for the A1 certificate, please go to the website of the Finnish Centre for Pensions at www.etk.fi, section Pension Insurance > Insuring in Finland > Work abroad. Working in a country where neither EU regulations nor social security agreements apply If you are working for a Finnish employer and posted from Finland to a non-agreement country, you have to

Earnings-related Pension Provision for Employers and the Self-employed 2015 15 be insured in Finland under TyEL for as long as your work contract is valid. This obligation stands even if you have to pay contributions to your country of employment. As a Finnish employer, you may voluntarily arrange provision under TyEL for your posted employees who are not covered by mandatory insurance. If you are hired from abroad, you can also be insured voluntarily if you are covered by the Finnish social security (earningsrelated insurance or residence-based social security) at the start of your employment contract. Voluntary insurance is possible if, during the posting abroad, your employer is a Finnish company, a foreign company which belongs to the same group as the Finnish company, or a company in which the Finnish company exercises authority. The policyholder of the voluntary earnings-related insurance policy has to be a Finnish company. Salary for insurance purposes for work abroad The earnings-related contributions paid by both the employer and the employee during a posting abroad are based on a so-called salary for insurance purposes. The salary which would be payable for corresponding work in Finland, or the salary which may otherwise be considered to correspond to the work in question, is considered the salary for insurance purposes. If the assignment lasts for more than six months, the employer and the employee should together determine the salary for insurance purposes. The rule on the salary for insurance purposes concerns all work performed abroad that is insured under TyEL, regardless of in which country the work is performed. The salary for insurance purposes is also used as the basis for the unemployment and workers compensation insurance contributions for the work abroad and, in general, also for the employer s social security contribution and the insured person s health insurance, medical care and sickness allowance contributions. Inquiries about insuring work abroad and certification applications: Finnish Centre for Pensions Insurance matters during employment abroad tel. +358 29 411 2816 e-mail ulkomaanasiat@etk.fi

16 Earnings-related Pension Provision for Employers and the Self-employed 2015 Shortcut to information The website of the Finnish Centre for Pensions at www.etk.fi provides information about earnings-related s for employers. The website www.tyoelake.fi is also an easy shortcut to information. You can access the pages of authorised providers through that site. Earnings-related insurance providers Elo Mutual Pension Insurance Company Tel. +358 20 703 50 www.elo.fi Etera Mutual Pension Insurance Company Tel. +358 10 553 300 www.etera.fi Ilmarinen Mutual Pension Insurance Company Tel. +358 10 284 11 www.ilmarinen.fi The Insurance Company Pensions-Alandia Tel. +358 18 29 000 www.alandia.com Varma Mutual Pension Insurance Company Tel. +358 10 2440 www.varma.fi Veritas Pension Insurance Company Ltd Tel. +358 10 55 010 www.veritas.fi Mela Tel. +358 29 435 11 www.mela.fi The Seafarer s Pension Fund Tel. +358 10 633 990 www.merimieselakekassa.fi Apteekkien Eläkekassa Tel. +358 9 612 6270 www.aekassa.fi Eläkekassa Verso Tel. +358 20 198 5980 www.elakeverso.fi OP Bank Group Pension Fund Tel. +358 10 252 010 www.op.fi Valion Eläkekassa Tel. +358 10 381 171 www.valionelakekassa.fi

Earnings-related Pension Provision for Employers and the Self-employed 2015 17 The provision of employees can be arranged in an already existing fund. Companies in the same field may also establish a joint fund if the number of employees exceeds 300. Correspondingly, a company that employs at least 300 employees can establish a company fund to manage the provision of its employees. For further information, please contact: The Association of Pension Foundations Tel. +358 9 687 7440 www.elakesaatioyhdistys.fi Other useful contact information Finnish Centre for Pensions Tel. +358 29 411 20 www.etk.fi Keva Keva handles the matters of local government, State, Kela and Evangelical-Lutheran Church employees. Tel. +358 20 614 2837 www.keva.fi The Education Fund Tel. +358 9 680 3730 www.koulutusrahasto.fi Employees Group Life Insurance Pool Retro Life Assurance Company Ltd. Tel. +358 20 763 1680 www.retro.fi

18 SUPPLEMENT 2015 Index figures There are two different indices in the earnings-related system. The wage coefficient concerns all persons who are in gainful employment. In the wage coefficient, the weighting of changes in salaries is 80 per cent and that of changes in prices 20 per cent. This coefficient is used to revalue able earnings and the amount limits in the earnings-related acts. The earnings-related index is used to revalue all s in payment, regardless of the recipient s age. In this index, the weighting of changes in salaries is 20 per cent and that of changes in prices 80 per cent. Year Wage coefficient Earnings-related index 2015 1.363 (+0.96%) 2519 (+0.39%) Life expectancy coefficient The life expectancy coefficient is determined for each age cohort at the age of 62. When calculating the, the accrued is multiplied by the life expectancy coefficient. Year of birth 1947 1.00000 1948 0.99170 1949 0.98689 1950 0.98351 1951 0.97914 1952 0.97552 1953 0.97200 Life expectancy coefficient Euro limits in earnings-related acts Lower limit for coverage by the Employees Pensions Act (TyEL): EUR 57.10 per month. Lower limit for coverage by the Self-Employed Persons Pensions Act (YEL): EUR 7502.14 per year. YEL upper limit: EUR 170,375.00 per year. Lower limit for coverage by the Farmers Pensions Act (MYEL) (incl. grant recipients): EUR 3,751.07 per year.

SUPPLEMENT 2015 19 Earnings-related contributions of employees The average insurance contribution under TyEL in 2015 is 24.0 per cent of the wage. The employee contribution is 5.7 per cent for those under the age of 53 and 7.2 per cent for those aged 53 and above. The average employer contribution is 18.0 per cent. The contribution for the occasional employer under TyEL is 24.7 per cent, from which the employer s contribution is obtained by deducting the employee s share of the contribution. MEL The contribution rate under the Seafarer s Pensions Act is 22.8 per cent of the wage. The employer and the employee pay 11.4 per cent each. Earnings-related contributions of the selfemployed Self-employed persons are themselves liable for the payment of contributions under YEL or MYEL. The contribution is charged based on the income confirmed in the insurance. YEL The YEL contribution is 23.7 per cent of the wage for persons aged under 53 and 25.2 per cent for persons aged 53 and above. A newly self-employed person is entitled to a discount of 22 per cent on the insurance contribution for the first 48 months. MYEL For a reported income of less than EUR 26,281.69, the contribution is 12.798 per cent for persons under 53, and 13.608 per cent for persons aged 53 and above. For reported income ranging between EUR 26,281.69 and 41,299.87, the contribution rate increases on a sliding scale. For a reported income of more than EUR 41,299.87, the contribution is 23.7 per cent for persons under 53, and 25.2 per cent for persons aged 53 and above. The average contribution rate for farmers insured under MYEL is 13.7 per cent and 13.1 per cent for grant recipients. General interest on arrears is 7.5 per cent until 30 June 2015. It is levied on, for example, overdue contributions and s. Unemployment security of the self-employed In order to be entitled to income security for the unemployed, a self-employed person must have a confirmed income of at least EUR 12,326 per year.

20 SUPPLEMENT 2015 Employer s social insurance contributions The employer s social security contribution consists solely of the health insurance contribution, which in 2015 is 2.08 per cent of the wage for all employers. Workers compensation insurance The contribution rate varies between 0.1 7 per cent according to the accident risk involved. The average contribution is about 0.85 per cent of the total payroll. Farmers pay a basic contribution of EUR 30.29 as well as 1.25 per cent of their income under MYEL. Farmers are allowed reductions in their contributions for years without accidents and for participation in occupational health care. The workers compensation insurance contributions of grant recipients constitute half of the farmers contributions. Unemployment insurance The employer pays a contribution of 0.8 per cent for the first EUR 2,025,000 of the total payroll, and 3.15 per cent for the part exceeding that amount. The unemployment insurance contribution is paid to the Unemployment Insurance Fund (www.tvr.fi). Employees group life insurance The labour market organisations have agreed on group life insurance. The insurance premium for this is paid in connection with the workers compensation insurance. On average, the premium is slightly less than 0.07 per cent of the company s total payroll. The farmers group life insurance contribution is EUR 12 per year, and the insurance contribution of grant recipients is EUR 0,00 per year. Employees social security contributions Health insurance: medical care contribution 1.32 per cent, daily allowance contribution 0.84 per cent. Unemployment insurance contribution 0.65 per cent Earnings-related insurance contribution 5.7 per cent for persons aged under 53 and 7.2 per cent for persons aged 53 and above. Protected amount at distraint Part of the income is protected as maintenance for the er and his or her family and cannot be distrained. The protected amount is EUR 680.70 per month, and the increase for each dependent is EUR 243.30 per month.

SUPPLEMENT 2015 21 Impact of the earnings-related on the national Amount of earnings-related which does not entitle to a national in 2015: Single er: Married or co-habiting er: EUR 1,315.88/month EUR 1,172.05/month Full national : Single er: Married or co-habiting er: EUR 636.63/month EUR 564.69/month Guarantee Guarantee : EUR 746.57/month Pensions and taxation The earnings-related, the national and the guarantee constitute taxable income. Pension income entitles to a income deduction in municipal and national taxation according to the table below. When the income exceeds the limits in the table below, the income deduction is reduced. Low-income retirees receive an additional basic deduction in municipal taxation, the maximum amount of which is EUR 2,970. Only the public service broadcasting tax is levied on national or guarantee s alone. Pension income deduction and income limits in 2015 Full deduction Pension for which tax becomes payable Municipal taxation 9 140 11 068 26 066 National taxation 12 540 23 998 41 039 Pension for which no deduction Municipal tax rate and ers medical care contribution in 2015 Average municipal tax rate on income, % 19.84 Pensioner s medical care contribution, % 1.49 Total 21.33 In addition, members of the Evangelical-Lutheran Church pay an average church tax of 1.43 per cent.

22 SUPPLEMENT 2015 In the following examples, the national and the guarantee have been calculated for someone who has no other income than the earnings-related. The total is the monthly sum of the earnings-related, national and guarantee s combined. Taxes have been calculated assuming that the same monthly income has been paid throughout the year. Taxes and comparable payments have been calculated according to the final taxation in 2015. The municipal tax and the ers medical care contribution are as listed above, while the Church tax rate has not been taken into account in the calculation. A public service broadcasting tax of 0.68 per cent, or a maximum of EUR 143 per year, is paid on the. National s and guarantee s drawn before the age of 65 are reduced for early retirement by 0.4 per cent per month taken early. The 4.5 per cent accrual rate of the earnings-related after the age of 63 does not reduce the national. In the examples below, the earnings-related has been adjusted with the life expectancy coefficient. Single er Pension starts at age 63, reduction for early retirement on national, EUR/month Earningsrelated National Guarantee Total Taxes and contributions Taxes and contributions, % of gross Net 0 576 99 675 5 1 670 100 556 19 675 5 1 670 200 511 0 711 5 1 706 300 465 0 765 5 1 760 400 420 0 820 6 1 815 500 375 0 875 6 1 869 600 330 0 930 9 1 921 700 285 0 985 31 3 954 800 239 0 1039 53 5 987 900 194 0 1094 75 7 1020 1000 149 0 1149 96 8 1053 1100 104 0 1204 118 10 1086 1200 59 0 1259 140 11 1119 1300 13 0 1313 162 12 1152

SUPPLEMENT 2015 23 Earningsrelated National Guarantee Total Taxes and contributions Taxes and contributions, % of gross Net 1400 0 0 1400 196 14 1204 1500 0 0 1500 236 16 1264 2000 0 0 2000 419 21 1581 3000 0 0 3000 829 28 2171 4000 0 0 4000 1291 32 2709 Pension starts at 65, EUR/month An earnings-related accrued after age 63 does not reduce the national. The wage that forms the basis for a accrued after age 63 is assumed to be twice the earnings-related. Earningsrelated, 63 yrs Earningsrelated accrued after age 63 National Guarantee Total Taxes and contributions Taxes and contributions, % of gross Net 0 0 637 110 747 5 1 741 100 18 615 14 747 5 1 741 200 36 565 0 801 5 1 795 300 54 515 0 869 6 1 863 400 72 465 0 937 12 1 925 500 90 415 0 1005 39 4 966 600 108 365 0 1073 66 6 1007 700 126 315 0 1141 93 8 1048 800 144 265 0 1209 120 10 1089 900 162 215 0 1277 147 12 1130 1000 180 165 0 1345 174 13 1170 1100 198 115 0 1413 201 14 1211 1200 216 65 0 1481 228 15 1252 1300 234 15 0 1549 255 16 1293 1400 252 0 0 1652 296 18 1356 1500 270 0 0 1770 343 19 1427 2000 360 0 0 2360 550 23 1810 3000 540 0 0 3540 1079 30 2461 4000 720 0 0 4720 1642 35 3078

24 SUPPLEMENT 2015 Spouse or domestic partner Pension starts at age 63, reduction for early retirement on national, EUR/month Earningsrelated National Guarantee Total Taxes and contributions Taxes and contributions, % of gross Net 0 510 164 675 5 1 670 100 491 84 675 5 1 670 200 445 29 675 5 1 670 300 400 0 700 5 1 696 400 355 0 755 5 1 750 500 310 0 810 6 1 804 600 265 0 865 6 1 859 700 219 0 919 6 1 913 800 174 0 974 27 3 947 900 129 0 1029 49 5 980 1000 84 0 1084 71 7 1013 1100 39 0 1139 92 8 1046 1200 0 0 1200 117 10 1083 1300 0 0 1300 156 12 1144 1400 0 0 1400 196 14 1204 1500 0 0 1500 236 16 1264 2000 0 0 2000 419 21 1581 3000 0 0 3000 829 28 2171 4000 0 0 4000 1291 32 2709

SUPPLEMENT 2015 25 Pension starts at 65, EUR/month An earnings-related accrued after age 63 does not reduce the national. The wage that forms the basis for a accrued after age 63 is assumed to be twice the earnings-related. Earningsrelated, 63 yrs Earningsrelated accrued after age 63 National Guarantee Total Taxes and contributions Taxes and contributions, % of gross Net 0 0 565 182 747 5 1 741 100 18 543 86 747 5 1 741 200 36 493 18 747 5 1 741 300 54 443 0 797 5 1 791 400 72 393 0 865 6 1 859 500 90 343 0 933 10 1 922 600 108 293 0 1001 37 4 963 700 126 243 0 1069 64 6 1004 800 144 193 0 1137 92 8 1045 900 162 143 0 1205 119 10 1086 1000 180 93 0 1273 146 11 1127 1100 198 43 0 1341 173 13 1168 1200 216 0 0 1416 203 14 1213 1300 234 0 0 1534 250 16 1284 1400 252 0 0 1652 296 18 1356 1500 270 0 0 1770 343 19 1427 2000 360 0 0 2360 550 23 1810 3000 540 0 0 3540 1079 30 2461 4000 720 0 0 4720 1642 35 3078

26 SUPPLEMENT 2015 Pension accrual for social security benefits Pension accrues for social security benefits only when the earnings from work during working life amount to at least EUR 17,128.41. With the exception of the parenthood allowance, accrues from social security benefits only for the period for which compensation has been paid directly to the person. Parental benefits Maternity allowance, special maternity allowance, paternity allowance, parental allowance, partial parental allowance Sickness Insurance Act (1224/2004) Awarded by KELA Basis for the benefit Earnings forming the basis of the benefit, always at least EUR 713.68/month. Amount of the minimum allowance for period of work of the mother. - - For period paid to the employer Child home care allowance VEKL* (644/2003) KELA EUR 713.68/month for each month of child home care allowance Earnings on which the benefit is based for the accrued 117% 17% 100% * Act on reimbursement from state funds for the care of a child under the age of three and for periods of study. Sickness and rehabilitation benefits Rehabilitation allowance based on earnings-related acts Rehabilitation allowance based on the rehabilitation act of Kela (566/2005) Daily allowance granted based on rules of the workers compensation insurance Pension providers Kela Accident insurers Earnings for projected able service Earnings forming the basis of the rehabilitation allowance Earnings (=benefit) forming the basis of the compensation, but not if the compensation for loss of income has been paid as an additional 65% 65% 65%

SUPPLEMENT 2015 27 Sickness and rehabilitation benefits Compensation for loss of income granted based on rules governing motor liability insurance Daily allowance according to rules governing military accident insurance Sickness allowance, partial sickness allowance Sickness Insurance Act (1224/2004) Minimum level of sickness allowance following the basic allowance under the Unemployment Security Act Compensation for job alternation leave Act on Alternation Leave (1305/2002) Earnings-related allowance under the Unemployment Security Act (TTL 1290/2002) Basic allowance and labour market support under the Unemployment Security Act (TTL 1290/2002) Training benefits Adult training allowance according to the Act on Adult Training Allowance (1276/2000) Degree Basic vocational qualification VEKL* (644/2003) Motor liability insurers The State Treasury See workers compensation insurance See workers compensation insurance 65% 65% Kela Earnings that forms the basis for the sickness allowance as referred to in the Sickness Insurance Act, half of this sum in the case of partial sickness allowance 65% Kela EUR 1,427.36 /month 0% Unemployment funds Unemployment funds Earnings forming the basis of compensation for alternation leave Earnings forming the basis of the earnings-related unemployment allowance 55% 75% Kela EUR 1427.36/month 0% The Education Fund Kela Earnings forming the basis of the adult training allowance, for the selfemployed, EUR 713.68/month EUR 713.68 /month for a period determined based on the degree level 65% 100%

28 SUPPLEMENT 2015 Pension accrued for periods of study Pension that accrues for periods of study is determined in 2015 on the basis of calculated monthly earnings of approximately EUR 714. The accrual rate is 1.5 per cent/year. Pension does not accrue for the actual time of study but for a calculated period of study based on the degree received. Pension accrues for a basic vocational qualification for three years at the most and for a degree from a university of applied sciences for a maximum of four years. For a lower university degree, accrues for a maximum of three years and for a higher university degree for five years at the most. However, accrues for a period of study of five years at the most, even if the person were to complete several degrees.

SUPPLEMENT 2015 29 Reduced surviving spouse s 2015 Deceased person s 200 400 600 800 1000 1200 1400 1600 1800 2000 2200 2400 2600 2800 3000 3200 3400 3600 3800 4000 0 100 200 300 400 500 600 700 800 900 1000 1100 1200 1300 1400 1500 1600 1700 1800 1900 2000 200 100 200 300 400 500 600 700 800 900 1000 1100 1200 1300 1400 1500 1600 1700 1800 1900 2000 400 100 200 300 400 500 600 700 800 900 1000 1100 1200 1300 1400 1500 1600 1700 1800 1900 2000 600 100 200 300 400 500 600 700 800 900 1000 1100 1200 1300 1400 1500 1600 1700 1800 1900 2000 800 41 141 241 341 441 541 641 741 841 941 1041 1141 1241 1341 1441 1541 1641 1741 1841 1941 1000 0 41 141 241 341 441 541 641 741 841 941 1041 1141 1241 1341 1441 1541 1641 1741 1841 1200 0 0 41 141 241 341 441 541 641 741 841 941 1041 1141 1241 1341 1441 1541 1641 1741 1400 0 0 0 41 141 241 341 441 541 641 741 841 941 1041 1141 1241 1341 1441 1541 1641 1600 0 0 0 0 41 141 241 341 441 541 641 741 841 941 1041 1141 1241 1341 1441 1541 1800 0 0 0 0 0 41 141 241 341 441 541 641 741 841 941 1041 1141 1241 1341 1441 2000 0 0 0 0 0 0 41 141 241 341 441 541 641 741 841 941 1041 1141 1241 1341 2200 0 0 0 0 0 0 0 41 141 241 341 441 541 641 741 841 941 1041 1141 1241 2400 0 0 0 0 0 0 0 0 41 141 241 341 441 541 641 741 841 941 1041 1141 2600 0 0 0 0 0 0 0 0 0 41 141 241 341 441 541 641 741 841 941 1041 2800 0 0 0 0 0 0 0 0 0 0 41 141 241 341 441 541 641 741 841 941 3000 0 0 0 0 0 0 0 0 0 0 0 41 141 241 341 441 541 641 741 841 3200 0 0 0 0 0 0 0 0 0 0 0 0 41 141 241 341 441 541 641 741 3400 0 0 0 0 0 0 0 0 0 0 0 0 0 41 141 241 341 441 541 641 3600 0 0 0 0 0 0 0 0 0 0 0 0 0 0 41 141 241 341 441 541 3800 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 41 141 241 341 441 4000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 41 141 241 341 Surviving spouse s own

Finnish Centre for Pensions ELÄKETURVAKESKUS Information centre for the Finnish statutory earnings-related scheme Kirjurinkatu 3, Itä-Pasila, Helsinki Postal address: FI-00065 ELÄKETURVAKESKUS, Finland Tel. +358 29 411 20 Tel. +358 29 411 2821 (Customer Service) www.tyoelake.fi www.etk.fi Picture: Johner Bildbyrå AB