Interest rate on earnings-related pension insurance contributions to rise

Written by Michael Griffiths

11/11/2022

The interest rate applicable to earnings-related pension insurance contributions is to rise to 2.45% at the beginning of next year, according to Varma.

The insurance contribution interest rate came into use in 2016 and so far has been sitting at 2%.

Varma said the effects of rising interest rates on the market can also be seen in the insurance contribution interest rate, which is based on TyEL’s 12-month reference rate quoted daily at Garantia, but this is always at the minimum 2%.

This reference rate is based on Euribor interest rates and the yields on the benchmarks bonds of the Eurozone countries. The insurance contribution interest rate used in TyEL contributions is reviewed twice a year and the rate used in YEL contributions is reviewed once a year, at the beginning of the year.

Varma said: “The insurance contribution interest rate is applied to insurance contributions for the period from the theoretical due date to the actual due date. The theoretical due date of TyEL contributions is the last day of the month following the salary payment month.

“Insurance contributions that are paid at the latest on the theoretical due data are not subject to insurance contribution interest.”

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