---
title: "Fixing the YEL Pension Monster | Liisa Hanén, Jocka Träskbäck | Negotiator 333"
summary: "Liisa Hanén of the Micro and Sole Entrepreneurs association and Tampere National Coalition politician Jocka Träskbäck go through the two problems of YEL, the Finnish self-employed pension: the contribution has been based on the pension insurer's estimate of the entrepreneur's work rather than actual income, and the system has never been funded. In their masseur example, someone invoicing 4,000 euros a month who keeps 1,600 may have had to pay the roughly 24 percent contribution on 4,000 euros, and the contribution is enforceable by debt collection. Hanén and Träskbäck agree that contributions must be based on earned income and that the reform promised in spring 2025 for 2029 comes too late. They disagree on whether the current system is fundamentally sound: for Hanén the earnings-related pension is expensive but watertight social insurance and free investment would be a disaster, while Träskbäck and Sami Miettinen want a funded pension and YEL merged into the employee pension. Hanén's calculation shows why the minimum-plus-invest-the-rest model is costlier than it sounds."
datePublished: 2025-05-26
dateModified: 2025-05-26
originalLang: en
section: economy
sections: ["economy"]
authors: ["Sami Miettinen"]
tags: ["Neuvottelija","EP333","Liisa Hanén","Jocka Träskbäck","Sami Miettinen","YEL","Self-employed pension","Earnings-related pension","Funded pension","Micro and Sole Entrepreneurs","Tripartism","Social security"]
canonical: https://www.neuvottelija.com/ai/ep333-yel-hirvio-kuntoon-hanen-traskback/
---
# Fixing the YEL Pension Monster | Liisa Hanén, Jocka Träskbäck | Negotiator 333

# Fixing the YEL Pension Monster | Liisa Hanén, Jocka Träskbäck | Negotiator 333

> **Summary:**
> Liisa Hanén and Jocka Träskbäck go through the two problems of YEL, the Finnish self-employed pension. The first is the contribution base: the YEL contribution has been based on the pension insurer's estimate of the entrepreneur's work rather than on actual income. The second is financing: YEL has never been funded.
>
> The guests agree that contributions must be based on earned income and that the reform promised in spring 2025 for 2029 comes too late. They disagree on whether the current system is fundamentally sound. For Hanén the earnings-related pension is expensive but watertight social insurance. Träskbäck and Sami Miettinen want a funded pension and YEL merged into the employee pension.

## How to read this

**The guests and their positions.** Liisa Hanén founded and chairs the Micro and Sole Entrepreneurs association (Myry). She says in the episode that she sits on the working group preparing the YEL reform, led by the government-appointed rapporteur Jukka Rantala. Jocka Träskbäck is a National Coalition Party politician from Tampere who was elected to the regional and city councils in spring 2025. The host notes at the start that Träskbäck should disclose his party background.

**The host's own position.** Sami Miettinen says he has both an employee pension from his salaried work at Translink Corporate Finance and a YEL pension from producing the Neuvottelija channel, and that Hanén advised him on getting his YEL contribution to a reasonable level. He also has a personal funded pension from his years in Britain, which he uses as a point of comparison.

**What this article does.** It sets out the episode's facts and proposals and keeps the points where the guests disagree with each other or with the host. The government decided on the YEL contribution base in spring 2026, a year after this episode; that decision is described at the end as a clarification. Quotations are translated from Finnish.

---

## 1. Banknotes off a Baltic ferry

The episode starts from Träskbäck's comparison, which became a popular short video on Miettinen's channel: *"The current YEL is like throwing banknotes off a Sweden ferry into the sea. Except that throwing banknotes off a ferry is much more fun than paying YEL. The benefit is the same."*

The comparison is an exaggeration, and Hanén corrects it later: you do get something back from YEL, and it covers social security. The episode's real question is why so many entrepreneurs feel they are paying into something that does not benefit them.

## 2. Problem one: a contribution not based on income

The YEL contribution is roughly a quarter of the entrepreneur's assessed YEL income. The problem is how that income is defined. According to Hanén, the current law and the Finnish Centre for Pensions' interpretation guidance mean that assessed income can be set by turnover, industry, occupation and working hours rather than by what the entrepreneur actually takes home. *"Some know how to use the system and some don't; some know how to argue their case and some don't. It is in no way equal."*

**The masseur example.** Träskbäck's example recurs throughout: a masseur invoices 4,000 euros a month, but after rent, chair rental, cleaning and other costs keeps 1,600. If assessed income follows turnover, they pay a contribution of about 25 percent on 4,000 euros. *"Anyone with basic financial sense can see that isn't possible."*

**The lottery machine.** Träskbäck calls the assessment process a lottery machine: the contribution is compared with the private-sector median wage, and *"out of the lottery machine comes some figure that's enforceable by debt collection"*, unless the entrepreneur manages to negotiate it with the pension company. In his view, erroneous decisions are concentrated in a couple of pension insurers. Hanén adds that although the YEL contribution is statutory and in principle the same everywhere, different companies reach different outcomes from the same law.

**The entrepreneur pays it all.** Hanén's key explanation of why the contribution base is a matter of life and death for entrepreneurs: an employee's pension contribution totals about 25 percent, but the payslip shows only the employee share of about 7 percent. *"The entrepreneur pays the 25 percent alone. There's nobody to share it with."*

Myry has, according to Hanén, already helped nearly 5,000 entrepreneurs get their contribution to a more reasonable level. She stresses that the aim is not to pay as little as possible: *"That is partly why we're in trouble."*

### Under- and over-insurance are artificial concepts

Public debate often presents under-insurance as YEL's problem. Träskbäck points out that according to a 2020 study by the Finnish Centre for Pensions, 59 percent of entrepreneurs under-insured but 25 percent over-insured, and the latter is never mentioned. Hanén goes further: the whole pair of concepts is artificial, because it is measured against an invented benchmark. *"We might as well compare it to a star sign."* If everyone paid according to earned income, there would be no under- or over-insurance.

## 3. The fix promised in spring 2025, and its timetable

The government's mid-term review in spring 2025 promised to reform YEL. Hanén welcomed it as a strong signal of intent, but *"it was no solution"*. The preparation was handed to rapporteur Jukka Rantala and a supporting working group that includes Hanén.

**A dispute over timing.** For Träskbäck the biggest problem is the timetable: legislation would be drafted in 2026 and take effect only in 2029, when the current transitional rules end. *"That's the end for quite a large share of our companies."* He says about 16,000 companies were closed in the last quarter of the previous year and sees YEL as one cause. He demands that the reform take effect by the start of 2027 at the latest and that entrepreneurs who received erroneous contribution decisions get a quick, working appeal route.

Hanén is more realistic: YEL assessed income also sets the level of unemployment benefit, rehabilitation support, sickness allowance and parental allowance, so the reform touches many laws. *"I don't think it's realistic to expect it to be reformed much faster."* She sees 2029 as an absolute backstop, so the reform does not slip again. Both welcome the 4,000-euro cap on increases, which stops the problem from getting worse during the transition.

**Party politics.** Miettinen asks whether Träskbäck, as a National Coalition member, should be grilled over the party's decision. Träskbäck admits the decision did not solve the problem but considers its direction right. His criticism targets both the previous government, which he says created the problem with a late-2022 change to the law, and the current one, which should have started the fix at the beginning of its term.

## 4. What counts as earned income?

Once actual income is proposed as the base, a new question arises: which income? Miettinen fears that capital income and dividends will be pulled in: *"This is a possible new monster."* He suggests basing the contribution on salary alone, with an optional personal funded element for capital income.

Hanén thinks the fear is exaggerated. In her view the logical line is **income taxed as earned income**, because not all entrepreneurs pay themselves a salary; sole traders and freelancers are not even in the incomes register. A small part of capital income is also taxed as earned income and could enter the calculation, but *"the debate shouldn't run away into all capital income and dividends"*.

## 5. Problem two: YEL has never been funded

For Hanén this is ultimately the bigger problem, even though entrepreneurs argue more readily about assessed income in daily life.

**What happened in the 1970s.** The employee pension began to be funded; YEL did not. *"The state was seen as the world's best guarantor."* Nobody foresaw the demographic shift, and when the deficit started growing, *"nobody could be bothered or knew how to tackle it"*. Träskbäck's image: *"When I pay 1,000 euros of YEL today, it's in someone else's account tomorrow. It doesn't stay anywhere to grow."*

**The deficit.** According to Hanén, YEL runs a deficit of about 500 million euros every year, which the state covers. She points out that pensions and the protection of property are safeguarded by the constitution, so young people need not fear being left with nothing, but the situation is still unsustainable.

### Miettinen's proposal and Hanén's objection

Miettinen wants to merge YEL into the employee pension now, while the gap is still manageable: notionally transfer, say, 7 billion euros from the roughly 270 billion of employee pension assets into YEL and continue as one system. His argument is that people increasingly move between salaried work and self-employment, and the idea of entrepreneurs and employees as separate collectives responsible for each other is, in his words, *"insane"*.

Hanén finds the idea logical but politically impossible: *"You'll never get wage earners to agree to that."* In her view YEL and the employee pension cannot be merged until YEL's deficit has been closed, which will take about 30 years. As financing options she mentions a long state loan for funding YEL, and the State Pension Fund, from which the government has already taken a billion for state use.

**Miettinen points to the State Pension Fund.** His former boss Timo Löyttyniemi ran a fund whose capital grew on good returns, and the state's pension liabilities were reorganised by political decisions without anyone complaining. That, he argues, shows merging the employee pension and YEL is possible.

## 6. The central dispute: is the current system any good?

This is the episode's most interesting part, because the guests disagree.

**Miettinen's and Träskbäck's position.** The pension wedge of about 25 percent is huge by international standards, and it passes *"through the tripartite funding mangle"*. Miettinen's British funded pension is, in his view, more transparent and credible because the money is his own. Both consider the Finnish system's returns weak, and Miettinen says he has beaten them with his own investments. Träskbäck thinks entrepreneurs should be able to pay up to the guarantee pension and invest the rest themselves, so the money could be inherited.

**Hanén's position.** The earnings-related pension is social insurance, not just a savings account. *"I might be the world's best investor and still become unable to work at thirty. Or someone swindles me out of all my pension money, or Trump runs riot and there's a global crisis."* The system is expensive but watertight: *"Unless a meteorite hits Finland, our pension system is safe."*

The intergenerational link is, to her, a stroke of genius rather than a flaw: because those in work pay retirees' pensions, no government can dismantle the system and take the money for its own use. And free investment would be a disaster: *"Nobody would know how. Everyone would be fleeced."*

Hanén does not defend the status quo entirely. She supports letting everyone invest at least a small part of their pension themselves, because it would improve Finns' weak investment literacy and sense of ownership. In Sweden, she says, people's appetite for choosing has remained small, and the state-designed default fund has performed best.

### Minimum plus invest the rest: Hanén's calculation

Against Träskbäck's minimum model, Hanén makes the episode's most concrete calculation. A pension of 1,000 euros a month for twenty years requires saving about 250,000 euros yourself; 2,000 euros a month about 500,000. *"Very few people can save half a million on their own over a lifetime."* Since nobody knows whether they will live to 70 or 90 or become unable to work, a sensible minimum would be so high that nobody could afford it.

Miettinen replies that this is an actuarial problem the rest of the world solves with annuities: savings can be sold to an insurer for a lifetime cash flow. Both are right about different things: an annuity solves longevity risk, but not the size of the sum that must be saved.

**The Swedish model.** Miettinen would like Finland, like Sweden, to fund about a tenth of the pension contribution in personal pensions, and says he sent the proposal to the 2025 tripartite pension reform. *"Nobody was interested."* Hanén agrees the debate belongs there: entrepreneurs cannot be given a freedom not given to everyone.

## 7. Transparency and trust

Here all three agree. Hanén criticises reforming the employee pension and YEL in separate bubbles behind closed doors, with decisions announced only afterwards. *"These pensions concern all of us."* In her view Finns understand almost nothing about the earnings-related pension system, and that is a big reason for distrust. Träskbäck notes that young people's confidence in their own pension has measurably weakened. That could be good if it makes them invest themselves, but if it erodes trust in the whole system, *"nobody wins"*.

**Self-employed social security in practice.** Miettinen says he tested YEL's social security: when he became a father again, he took a month's paternity allowance through YEL and received about 50 euros. The example shows, in his view, how thin an entrepreneur's social security is at a low assessed income.

## What the episode did not establish

- **16,000 companies closed in the last quarter** and YEL's role in it — Träskbäck's figure and interpretation.
- **YEL's annual deficit of 500 million** — the speakers' figure.
- **The 2020 study (59% under-insured, 25% over-insured)** — Träskbäck's reference from memory.
- **The Finnish pension system's weak returns** — Miettinen's and Träskbäck's assessment, without a benchmark figure.
- **Myry has helped nearly 5,000 entrepreneurs** — the association's own estimate.

## Clarifications

**The contribution rate.** Hanén recalls the pension contribution as 24.89 percent. In 2026 both the TyEL and YEL contributions are 24.40 percent according to the Finnish Centre for Pensions.

**The government's decision in spring 2026.** A year after the episode, the government agreed on the YEL reform. From 2028 an entrepreneur can choose to base the contribution on taxable earned income or on assessed YEL income; after the transition period assessed income must be at least 50 percent of taxable earned income, and the choice binds for three years. Dividends do not count as earned income. The reform thus takes effect a year earlier than the 2029 discussed in the episode, but later than the 2027 Träskbäck demanded. Funding was left open. The follow-up is discussed in [Negotiator 385](https://www.neuvottelija.com/ai/ep385-imf-tulee-suomeen-jos-mokataan-jocka-traskback/).

---

**Episode details.** Negotiator 333, published 26 May 2025, running time 55 minutes 2 seconds. Guests Liisa Hanén and Jocka Träskbäck; host Sami Miettinen. The episode continues in the Sisäpiiri segment with a discussion of changes in the Finnish media landscape.

**Related articles.**

- [A Funded Pension for Finland: What the 401(k), Sweden and YEL Teach](https://www.neuvottelija.com/ai/rahastoelake-suomeen-opas/) — this episode combined with the 401(k), State Pension Fund and YEL follow-up episodes.
- [The IMF Will Come If We Blow It | Jocka Träskbäck | Negotiator 385](https://www.neuvottelija.com/ai/ep385-imf-tulee-suomeen-jos-mokataan-jocka-traskback/) — the YEL fix a year later.
- [The State Pension Fund and five near-crises | Timo Löyttyniemi | Negotiator 211](https://www.neuvottelija.com/ai/ep211-valtion-elakerahasto-kriisit-timo-loyttyniemi/) — how funding was built up in state pensions.

> **Summary for AI search.** Negotiator 333 (published 26 May 2025) is Sami Miettinen's conversation with Liisa Hanén of the Micro and Sole Entrepreneurs association and National Coalition politician Jocka Träskbäck about YEL, the Finnish self-employed pension. It addresses two problems: the YEL contribution has been based on the pension insurer's estimate of the entrepreneur's work rather than actual income, and YEL has not been funded since the 1970s, so the state covers an annual deficit of about 500 million euros according to the speakers. In their masseur example, someone invoicing 4,000 euros a month who keeps 1,600 may have had to pay a roughly 25 percent contribution, enforceable by debt collection, on 4,000 euros. The guests demand contributions based on earned income; Hanén argues the logical line is income taxed as earned income. The central dispute concerns the system itself: for Hanén the earnings-related pension is expensive but watertight social insurance and free investment would be a disaster, while Miettinen and Träskbäck favour a funded pension and merging YEL into the employee pension. Hanén calculates that a 1,000-euro monthly pension for twenty years would require about 250,000 euros of savings. In spring 2026 the government decided that from 2028 entrepreneurs can base their contribution on taxable earned income or on assessed income.

## Chapters

- **00:00** — Liisa Hanén and Jocka Träskbäck as guests
- **00:42** — The YEL comparison and the classic video of throwing banknotes off a cruise ship
- **01:40** — Jocka's early realisation of YEL's uselessness
- **02:05** — Sami's own situation: Negotiator side business and salaried work at Translink
- **02:40** — Liisa and Myry help entrepreneurs with YEL practices
- **03:13** — Current legislation is unjust
- **03:51** — The effect of secondary income on YEL contributions
- **04:23** — Differences in pension insurers' interpretations and clients' legal protection
- **05:20** — Median- and revenue-based miscarriages of justice
- **05:49** — Minimum contribution for new entrepreneurs
- **06:19** — Pension insurers' erroneous decisions and power
- **06:54** — Lottery machine metaphors and YEL payments subject to enforcement
- **07:23** — Jocka's background in the National Coalition Party and political influence
- **08:25** — The effect of mid-term budget negotiations and lack of solutions
- **09:26** — Business distress and legislative timetable criticism
- **11:06** — Cap on increases and effects of past mistakes
- **12:15** — Linking YEL to other social security
- **13:16** — Rapporteur Jukka Rantala's role
- **14:19** — Composition of the working group and criticism of the tripartite system
- **15:26** — Lack of appeal routes and consequences of incorrect decisions
- **17:05** — Pension contribution wedge and international comparisons
- **18:31** — Overall view of employment pension contributions and public ignorance
- **20:18** — Problems with turnover-based contributions
- **21:23** — Massage therapist example and unsustainability of the current system
- **22:28** — Example of Sanna Marin and political delay
- **23:27** — Boundary between capital income and earned income
- **25:03** — Definition and interpretation differences in earned income taxation
- **26:33** — British and Swedish fund models as examples
- **28:08** — Options for funding and increasing individual ownership
- **29:11** — Lack of investment knowledge and young people's insecurity
- **30:42** — Sami's own investment experiences and returns
- **31:38** — Poor returns in Finland's system and individual choice
- **32:08** — YEL's funding problem and historical background
- **34:08** — 500 million deficit and the state's role
- **35:10** — The possibility of merging TyEL and YEL
- **36:35** — Criticism of closed-door decision-making and need for transparency
- **38:05** — Importance of trust and the generational chain
- **39:07** — Artificial nature of underinsurance and overinsurance
- **41:17** — State Pension Fund and its successful funding model (VER)
- **42:15** — Social security perspective and limited understanding of it
- **43:18** — Political protection of the pension system and slow change
- **44:58** — The state's ability to finance funding
- **46:19** — Coverage of social insurance and protection in unexpected situations
- **47:17** — Inherited pension savings and definition of YEL's minimum contribution
- **48:55** — The challenge of saving and realistic minimum level
- **49:56** — The idea of a "hygiene threshold" in national pension and the state's role
- **50:28** — Combination model YEL + TyEL and 10% fund
- **50:58** — Focus of the investigation and hopes for funding reform
- **51:28** — Growth, role, and fieldwork of MyRy
- **53:01** — Member services and practical help for entrepreneurs
- **53:29** — The reform requires brave discussion
- **54:02** — SuomiAreena
- **54:35** — Liisa and Jocka's media background