Increasing Numbers of Self-Employed, Increasing Risk of Poverty in Old Age?

For a long time, self-employed people were not the focus of research on old-age poverty in Germany. On the one hand, a large proportion of them were compulsorily included in various pension schemes, namely the pension scheme for the liberal professions (i.e., doctors, architects, lawyers, notaries), the pension scheme for farmers and the statutory pension insurance. On the other hand, it was assumed that the vast majority of the remaining self-employed were able to make sufficient private provision for their old age. However, the significant change in employment activities and forms of employment in recent decades has led to an increasing number of self-employed not compulsorily insured in a pension scheme. Many of them are so called “solo self-employed” who do not employ any staff. Furthermore, these self-employed very often have not sufficient funds for private pension provision resp. general accumulation of wealth or are not prepared to use them accordingly. One of the consequences of this is that according to the government’s pension report in 2020 – new figures will be available at the end of 2024 – the proportion of former self-employed persons who received means-tested old-age benefits, i.e., are considered poor according to the legal definition, was higher than for former employees.

Against this background, the article uses data from the study on “Life courses and old-age provision” to examine the current old-age provision and the (non-)employment biographies to date, as well as other objective and subjective determinants of the old-age provision of self-employed people aged between 40 and under 60 in Germany. The results can be used to estimate how the old-age provision of the self-employed and their specific risk of poverty will develop in the near future. Based on these analyses, suitable measures to combat old-age poverty among the self-employed can be discussed and evaluated.