Two out of five self-employed people in Finland are underinsuring themselves when confirming the basis for their future pension and social insurance, according to the Finnish Centre for Pensions (ETK).

According to statistics from ETK, 207,000 people were in 2018 insured under the Self-employed Person’s Pensions Act. One in four of these set their confirmed income, which forms the basis of their future pension and other social insurance, at or near the minimum requirement of €7,656.

Of the newly self-employed, the number is even higher, with two out of five, or 42 per cent, having underinsured themselves.

ETK development manager Eeva Poutiainen commented that the real-term average confirmed income of the newly self-employed is at the level it was at the beginning of the 2000s

“The average value of the currently insured confirmed income was reduced in 2018 in all age groups of insured self-employed persons. On average, the confirmed income of the younger age groups dropped more than those of the older age groups.”

Furthermore, the confirmed income under the act is on average 70 per cent of the taxable income of the self-employed, and more than half of the insured annual confirmed income under the act is less than €16,000.

ETK explained that the earnings-related pension insurance of the self-employed secures the income when the self-employment ends due to disability or old age, and provides for those left behind if the breadwinner dies.

The act also forms the basis of several social security benefits, including the sickness benefit, the unemployment allowance and the parental allowances.

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