TYEL

TyEL, short for Työntekijöiden eläkevakuutus, is Finland’s earnings-related pension insurance for employees. It is a mandatory component of the Finnish pension system and covers the majority of wage earners. The scheme provides old-age, disability, and survivors’ pensions, with benefit amounts calculated from lifetime earnings and years of service.

TyEL applies to most employees under a contract of employment who earn above a certain threshold. The system is funded through payroll contributions paid by both the employer and the employee. The rates depend on earnings, age, and other factors, and are set by law. Contributions are collected by TyEL insurers, which are typically private or public pension providers chosen by the employer.

Administration and coordination of TyEL are overseen at the national level by the Finnish Centre for Pensions. TyEL is part of the broader social security framework that includes the national pension administered by Kela, which provides a basic pension to those who qualify, ensuring a minimum income for individuals with low or no earnings. The TyEL system is designed to integrate with other pension benefits to create a cohesive earnings-related pension.

Relation to other schemes: Self-employed individuals rely on YEL (Yrittäjän eläkevakuutus) rather than TyEL, with different contribution rules and pension accrual. Workers who change jobs or move between employers may accumulate TyEL pension rights across employment histories, contributing to a continuous earnings-related pension throughout their career.