I am a lawyer and management consultant, self-employed myself, but comfortably ensconced in a pension fund. While I have theoretically already secured my retirement through my lawyer's pension, I observe political developments in Berlin with mixed feelings.
YOLO is a Thing of the Past – Now Comes the Pension Obligation for the Self-Employed
The new federal government (SPD and CDU/CSU, just two weeks in office) has tackled a challenging issue: From 2025, solo self-employed individuals will be required to make compulsory pension and social security provisions. This means no more excuses like “I’d rather invest in crypto than in the pension fund.” The state is now extending its social protection umbrella to influencers, coders, designers, craftspeople, and other self-employed professionals.
SPD social politicians such as Bärbel Bas, newly promoted to Minister of Labor, are delighted, believing that finally, everyone should contribute. Even Health Minister Sabine Dittmar is reportedly pleased, hoping the self-employed will be less of a burden on the health and care system in old age. The CDU/CSU, on the other hand, nods along somewhat disillusioned. They insist on being “founder-friendly,” stipulating in the coalition agreement that new self-employed people will be obliged to make pension provisions, but flexibly and with a sense of proportion.
Specifically, anyone starting their own business in 2025 must either pay into the statutory pension fund or provide evidence of a comparably secure private pension. This leaves small escape doors open, a typical CDU approach, as long as the economy doesn't complain too loudly. But what does this mean in concrete terms for the various types of self-employed people? Here is a personal, tongue-in-cheek situation report.
Influencers and Models: From #InstaLife to Pension Provision
Let's start with perhaps the most dazzling group: influencers, YouTubers, OnlyFans models, and all digital self-promoters. Previously, many of them believed that retirement provision consisted of followers and merch sales. Many haven't contributed a penny to pension insurance yet, living in the here and now with a YOLO attitude. However, this will soon change.
Anyone starting out as a self-employed influencer from 2025 will either have to pay into the statutory pension scheme or demonstrate a verified private cushion. For our Insta stars, this means that almost 19% of their income could go towards their pension fund in the future. Imagine having to set aside almost a fifth of every advertising deal for your 67-year-old self – now that’s a reality check! ????
An anecdote from my office: Last week, a panicked lifestyle influencer (let's call her Lisa) called me. She wondered whether she should hastily take out a Rürup pension to avoid joining the statutory scheme. While Rürup contracts are tax-advantaged, they are also quite unappealing: you practically don't get any money before you retire.
For Lisa, it feels like locking her money in a safe for 30 years without the key – no shopping, no spontaneous trip to Bali. Welcome to the real world of retirement planning! Alternatively, she considered classifying herself as an artist for the purposes of the artists’ social security fund. But honestly, the KSK will struggle to recognize OnlyFans content as high art.
Thus, Lisa has no choice but to accept the inevitable: either make voluntary provisions (e.g., with a Rürup contract) or soon be compulsorily insured in the pension fund. My recommendation to her was clear: be smart, do the math, and start building up reserves – whether private or statutory, the main thing is to do so. Because the party on Instagram can end faster than the algorithm changes.
Creative Professionals and IT Freelancers: Between KSK and Startup Mentality
Next, let's consider solo self-employed creatives and IT freelancers, such as graphic designers, copywriters, web designers, and software developers. These individuals are often the free radicals of the working world: highly specialized, well-networked, but often isolated when it comes to social security.
Fortunately, many creative people are already insured with the Künstlersozialkasse (KSK). This unique institution ensures that the state and clients cover half of the social security contributions for artists and publicists. Freelancers who qualify for the KSK (e.g., freelance journalists, graphic designers with an artistic portfolio, photographers with artistic aspirations) already pay into the statutory pension scheme. However, they only pay about half the contribution a “normal” self-employed person would.
For these KSK members, the new pension obligation will not change anything for the time being, as they already have exemplary coverage in the eyes of SPD social politicians. On the contrary, it might now be even more worthwhile to check if one can join the KSK. Every creative solo self-employed person who has hesitated so far should seriously consider it: Quickly become a KSK member before the pension obligation hits you full force.
Within the KSK, you only pay half the pension contribution and are also covered by health and long-term care insurance at favorable conditions. This offers worthwhile protection, even if you have to convincingly demonstrate your artistic activity to the authorities. (A little tip on the side: describing your own job in a more flowery way as “artistic” has already paved the way for some people to join the KSK. Creativity is not only required in your work but also in your job title).
Implications for IT Freelancers
What about IT freelancers, programmers, and consultants, who usually don't qualify as “artists”? Until now, they have enjoyed maximum freedom, often coupled with personal risk. Some have made private provisions (a well-diversified ETF portfolio is almost as common in the tech scene as a dark hoodie), while others trust that their next startup will finance their retirement.
However, from 2025, IT soloists will also have to either take out compulsory statutory insurance or make private provision with the obligation to provide proof. The good news is that the coalition agreement mentions “flexible forms of provision.” Other forms of pension provision are also to be recognized, such as real estate, share savings plans, or private pension insurance, provided they are “reliable and protected against insolvency.”
How exactly a freelancer is supposed to prove to the office that their ETF savings plan is “reliable” enough is still unclear. I imagine wonderfully bureaucratic scenes: the coder has to submit his securities account to the German Pension Insurance, and a clerk then assesses whether Microsoft, Tesla, and Bitcoin ETFs offer sufficient security for old age. Have fun!
Realistically, there are probably only a few recognized options: Rürup pensions are the hottest candidate for a private solution because they are already tax-privileged and cannot be terminated, effectively a private-sector copy of the state pension. Alternatively, compulsory entry into the statutory pension scheme remains an option.
Bogus Self-Employment and Client Relations
For clients of these freelancers, the reform brings mixed feelings. On the one hand, it could increase legal certainty if every freelancer officially has their pension plan in place. Until now, many companies worried that a freelancer could actually be a bogus self-employed person, leading to the company having to pay social security contributions.
An indication of bogus self-employment was, for example, if the freelancer had no pension provision of their own and was completely dependent on the client. In the future, this criterion will no longer apply to new self-employed persons, as they will have to make provisions. However, the core problem remains: when is a freelancer really self-employed and when is he actually an employee in disguise?
The new coalition promises to reduce bureaucracy and make clear distinctions. The coalition agreement even mentions a supreme court ruling (the “Herrenberg” case) that caused confusion in 2022 because a lecturer was suddenly classified as an employee. The aim is therefore to tighten criteria, speed up procedures (keyword: fictitious approval – if the clearing office does not decide quickly, the status is deemed recognized) and thus reduce the fear of the sword of Damocles of bogus self-employment.
As a consultant, however, I would advise: Don’t rely on it blindly. Contractors and clients should continue to ensure that contracts are worded clearly, that freedom from instructions and entrepreneurial action are evident. In short, genuine freelancing should be practiced instead of disguised sham work. The pension obligation does not fundamentally change this, except that it will catch everyone in the future, whether they are pseudo-self-employed or genuinely self-employed.
Artists and Photographers: Old Acquaintances of Compulsory Insurance
Freelance artists, publicists, and many photographers represent the group about whom I am most relaxed. Why? Because they have long been subject to a special form of compulsory pension and social insurance via the aforementioned Artists’ Social Security Fund. Anyone who earns their living as a painter, musician, writer, or artistic photographer is a compulsory member of the KSK anyway, provided the formal criteria are met.
This means that these individuals are already required to pay into the statutory pension insurance scheme, but they receive the aforementioned subsidy from the state and employers. So, what will change for these old hands in 2025? Hardly anything, actually. They already fulfill the pension obligation.
Nevertheless, a few points are worth noting:
- Firstly, the KSK could become more popular in the future. All those who have perhaps been on the edge of the “artist” definition and stayed away from the KSK will feel a new incentive to complete the application form. For example, a freelance photographer mainly shooting weddings and corporate events might have previously thought the KSK wasn't for him because he wasn't “artistic enough.” But if he has to pay contributions somewhere from 2025 anyway, he might consider describing his activity in a more creative way (“photographic art documentation of life events” sounds much loftier than “wedding photos”).
- Secondly, existing artists already in the KSK should check if they are maximizing benefits from the fund. The pension obligation won’t affect them anew, but it might be worth paying in a little more voluntarily (within certain limits, you can voluntarily top up your pension insurance contribution) to increase future claims. The discussion has highlighted that artists, too, will live off their pension at some point, which is often meager if only the minimum has been paid.
- Thirdly, a word to clients: if more people are insured through the KSK, remember that you have to pay the artists’ social security contribution on their fees. This is currently around 5%. This is not the end of the world, but some people will be surprised when the tax office or the KSK suddenly comes knocking. So far, this has flown under the radar, but as the number of KSK members increases, the number of audits will certainly also increase.
If you regularly commission freelancers for design, text, or photography, you should be aware of the artists’ social security contribution, otherwise, you could be in for a rude awakening. But take comfort in the fact that a 5% levy is better than a 100% bogus self-employment claim.
Individual Limited Liability Companies (e.g., Games Developers): Loophole or Dead End?
A particularly sophisticated type of self-employed person is the solo GmbH owner. Take a game developer who has founded a one-man GmbH. He is the managing director of his own company, often a 100% shareholder, and pays himself a salary. This sounds like an employment relationship at first glance, but it's not. As the controlling shareholder, he is as good as his own boss, and under social security law, he is not considered a “real” employee.
As a result, he has not had to pay pension insurance contributions for his managing director’s salary until now, unless he did so voluntarily. This has been a legal trick to avoid the pension insurance obligation, which would apply to a freelance developer with only one client, for example. The question of all questions: Will this loophole remain open from 2025?
Of course, politicians are aware of this structure. Although the coalition agreement only mentions “new self-employed persons,” every lawyer knows that regardless of whether I work as a freelancer without a legal form or have a limited company in between, I am ultimately the self-employed person behind the business. I fully expect that clever advisors will recommend in droves: “Set up a limited company, then you won’t fall under the new pension obligation.”
I also firmly believe that the legislator will either make improvements or the courts will decide that the economically self-employed person is covered after all. After all, the purpose of the reform is to bring all solo self-employed people under the umbrella, not to encourage new cherry-picking.
My advice to a one-person GmbH owner (be it a games developer, consultant, or anyone else) would still be: wait and see, but be prepared. It is not yet 100% certain how the regulation will be formulated. It could be that formally only natural persons who are newly founded will be subject to the obligation from a specific date. In this case, forming a GmbH could actually offer (temporary) protection.
However, a GmbH is no walk in the park either: accounting, higher tax consultancy costs, minimum capital – all just to perhaps save a few years’ pension contributions? This is only worthwhile in certain cases. And woe betide you if the government decides to close the loophole two years later – then you have burdened yourself with the GmbH and can still pay. In short: If you want to set up a GmbH just to avoid the pension obligation, you should think twice and weigh up the pros and cons carefully. It wouldn't be the first time that a clever trick ended up costing more than the problem it was supposed to avoid. ????
Craftspeople: Welcome to the Club (but it Was Already Full Anyway)
Last but not least: the craftspeople. Oh, our good craftspeople – whether electricians, carpenters, master bakers, or plumbers. Many of them can only shrug their shoulders at the current debate and say: “What’s changing? We’ve always paid into the pension fund!”
Indeed, there has always been a pension insurance obligation for registered craft businesses. Self-employed master craftspeople have always had to make compulsory contributions, at least for a certain period (keyword: exemption option after 18 years of contributions – anyone who has paid in for this long was allowed to apply to leave the pension insurance scheme to continue working privately if they wished). Many craftspeople are therefore familiar with the feeling of dutifully paying their pension contribution every month, without an employer’s contribution, out of their own pocket.
For them, 2025 will not bring any dramatic changes, except perhaps the inner satisfaction that the previously “privileged” liberal professions and tradespeople in other sectors will now also have to follow suit. Equality at last! the craftsperson might think: “While the designer was able to put every coin into his own equipment or consumption for years, I as a master craftsperson have always thought about later – forced to. Now it’s your turn, dear influencers and IT specialists!”
Of course, there are also craftspeople who previously fell outside the system. For example, solo craftspeople without an entry in the trades register (e.g., a self-employed tiler without a master craftsman’s certificate who could formally call himself a “service provider”). Under the new rules, they will no longer be able to avoid this either. In general, the landscape will become more homogeneous: where there were previously exceptions and loopholes, there will be more uniformity.
As a lawyer, I generally welcome this – clear rules for everyone, fewer gray areas. But I also know the downside: some craftspeople have found the compulsory contributions a burden, especially in the early years of a business. When income is still low, every euro put away “for later” hurts. The coalition promises to make the new pension insurance obligation “founder-friendly.” This probably means that young self-employed people will be given some breathing space at the beginning.
Perhaps there will be a grace period of one or two years in which contributions are not mandatory, or only minimal amounts. This has been done before in similar forms, and it would only be fair. After all, whether you’re a craftsperson or a designer, in the first few years of business, you’re often living off noodles with ketchup rather than big earnings. If the state becomes too demanding, it will achieve the opposite: fewer people will register as self-employed. So, it remains exciting to see how flexible the implementation will ultimately be.
Conclusion: Pension Provision – A Chore or a Necessary Evil?
As someone who is not covered by the state pension, but by the pension fund, I have much to say. I pay a considerable amount every month anyway, but at least I know it’s for my old age and I’m not tempted to spend the money elsewhere. Many of my self-employed clients, on the other hand, had to painstakingly impose this discipline on themselves, or they didn’t do it at all.
That’s the crux of the matter: as much as we can criticize the new pension and social security obligations as an encroachment on entrepreneurial freedom, it’s also true that there are an alarming number of solo self-employed people who put nothing aside for their old age. Whether out of ignorance, carelessness, or because their income is barely enough to live on, the result is often poverty in old age and ultimately reliance on social security. From this perspective, I cannot blame politicians when they say: “People, make provisions – if necessary, we’ll force you to take care of your future.” That may sound patronizing, but we also accept compulsory seatbelts in cars, even though they restrict our freedom to just drive around.
Nevertheless, criticism persists. Associations of the self-employed and even some parties (hello, FDP in opposition) warn that compulsory pension insurance reduces the attractiveness of self-employment. Who wants to set up a startup if they have to deal with pension forms and contributions? The specific structure will be decisive here.
If it is truly simple and flexible – e.g., a one-stop online verification portal where I enter my pension path and that’s it – then I can live with it. But if it ends up being bureaucratic overkill and you have to disclose every cent of your assets, there will be a huge outcry.
My personal point of view: I welcome the objective, but I keep an eye on the side effects. As a lawyer, I know that well-intentioned is not always well done. In any case, I will advise my clients to be proactive. Anyone who is already self-employed today and doesn't have to contribute should use the time to put something aside voluntarily. You never know whether in a few years there will be an obligation for existing self-employed people as well (SPD Minister Bas is openly considering bringing all – including existing – self-employed people and even civil servants into the pension fund!).
Anyone considering starting a business in 2025 or later should factor the additional costs into their business plan. And anyone who works creatively should look into the artists’ social security fund right now – it could be the difference between half and full contribution.
Finally, a bit of gallows humor: In my consulting practice, we are already joking that this reform will be a “lawyer employment program.” There are so many detailed questions (from “Does my rented apartment count as a pension?” to “Can I buy myself out of the obligation at 55?”) that my profession certainly won’t get bored. But joking aside, we all need to be clear: The rules of the game for the self-employed are changing fundamentally right now. The pension obligation may seem annoying, but it is politically desired and is coming. You can lament it or make the best of it.
For my part, I will continue to provide independent advice, point out the absurdities with a wink, and help my clients find the best pension strategy for them – statutory, private, or hybrid. And maybe, just maybe, in 30 years’ time, a few of today’s young influencers will be slumbering in their rocking chairs with a decent pension thanks to this reform, instead of having to ask for donations on Twitch. With this in mind: YOLO was yesterday – think about tomorrow!