A pension insurance obligation can affect freelancers in Germany if they essentially only work for one client and do not employ their own staff. Here we show you what that means and how you can prevent it.
Freelancers have to care for their retirement themselves
Unlike employees, freelancers in Germany are not automatically part of the statutory pension scheme. They don’t have an employer who deducts contributions for them and covers part of them.
Therefore, they have to provide for their old age themselves and can do so by making voluntary payments into the statutory pension scheme or by taking out a private pension plan. It is very important to plan ahead in order not to be affected by old-age poverty later on.
Due to various circumstances, a pension insurance obligation for self-employed people may arise, meaning that they have to become part of the statutory pension insurance. You should be aware of the criteria to be on the safe side legally.
Compulsory insurance for some professions
For certain self-employed people who are organized in a professional chamber, there is a pension insurance obligation via the pension fund of this chamber (in German: Versorgungswerk). This is the case, for example, with lawyers, tax consultants, doctors and architects. They pay contributions to their chamber’s pension fund and thus provide for their old age.
In addition, there are so-called “self-employed people in need of protection”, for example in the education and care professions, who must pay into the statutory pension insurance. This applies to self-employed teachers, educators, midwives and caregivers, among others.
Artists and publicists also belong to these groups in need of protection and can take out health insurance through the Künstlersozialkasse (KSK) and pay into the pension insurance through it. They only have to pay half of the contributions themselves.
When the pension insurance obligation may occur
In addition to the professions mentioned above, other self-employed people may also be affected by a pension insurance obligation in Germany. The following criteria must both be met for a self-employed person to be subject to compulsory pension insurance:
- They don’t have any employees who are subject to compulsory insurance: People who only work for a few hours a week (“Minijob”) don’t count.
- They work mainly for one client on a permanent basis: The limit is five-sixths of the turnover within one year.
For you as a freelancer, this means: If you have no employees and work (almost) exclusively for one client, you have to pay into the statutory pension insurance.
By the way, this is not the same as false self-employment. This occurs when you work for a client according to instructions and are integrated into internal processes to such an extent that there is no difference between you and an employee. You can find out more about false self-employment here.
Consequences of a pension insurance obligation
If you find out that you have to pay pension insurance, you should contact the German Pension Insurance (Deutsche Rentenversicherung). If you fail to do so, you may be required to pay additional contributions and fines are also possible.
You can either pay a contribution based on your income (income-related contribution) or opt for the standard contribution. This is (as of fall 2023) just over 600 euros per month, and is slightly higher in Western Germany than in Eastern Germany. In the first three years after you become self-employed, you can pay half the standard contribution, i.e. just over 300 euros per month.
How to avoid the pension insurance obligation
The criteria for a pension insurance obligation are very clear. Therefore, you basically just have to make sure that you don't meet both criteria. So you can either employ at least one employee (which goes beyond just a Minijob) or make sure that you don’t permanently generate five sixths of your turnover or more through just one client.
General pension insurance obligation for freelancers to come?
In order to ensure that freelancers make sufficient provision for their old age and are not affected by old-age poverty later on, a general pension insurance obligation for them has been under discussion in Germany for years. It therefore makes sense for you to stay up to date on the subject. However, freelancers will probably be able to make private provision as an alternative to statutory pension insurance in order to comply with the obligation.
Please note: This text does not replace legal advice and does not claim to be comprehensive on the topic.
