Private pension for the self-employed: your guide to financial security in later life
16.05.25
11
Minutes
Katrin Straub
Managing Director at nextsure
As a self-employed person, you carry great responsibility – including for your retirement provision. Discover how a private pension can help you avoid financial shortfalls in retirement and secure your standard of living. This article shows you in practical terms what options are available to you and what you need to consider.
The topic in brief and concise terms
Self-employed people must actively plan their retirement provision; the Rürup pension offers tax advantages with deductibility of up to 29,344 euros (2025 for single people).
Private pension insurance policies enable flexible contributions (often from €25/month) and various payout options.
A combination of different forms of retirement provision and consideration of tax aspects are crucial for an optimal personal pension for self-employed people.
Quick overview: key facts about private retirement provision for the self-employed
Self-employed people usually have to take responsibility for their retirement provision themselves, as there is often no obligation to pay into the statutory pension insurance scheme. Early and well-planned private pension for the self-employed is therefore crucial to securing their standard of living in later life. The Rürup pension, for example, offers tax advantages, as contributions of up to €29,344 for single people in 2025 can be claimed as tax-deductible. Private pension insurance policies allow flexible contributions, often from as little as €25 per month. Choosing the right strategy depends on individual factors such as income and risk appetite. Solid retirement planning is essential for every self-employed person.
The reality of retirement provision: Why self-employed people need to act now
The German Pension Insurance estimates that the risk for self-employed people of having to rely on basic income support in old age is twice as high as for employees. Without mandatory contributions to the statutory pension insurance scheme, there is a significant pension gap for many self-employed people. This gap between the last net income and the pension to be expected can jeopardise the accustomed standard of living. Many self-employed people underestimate the need for early provision and only start building a private pension late. The consequence is often inadequate provision in old age. It is therefore important to actively consider the various options of private pension insurance. The next sections will show you concrete approaches to solutions.
Options in detail: Statutory, Rürup and private pension insurance compared
Self-employed people have various ways to provide for retirement. One option is voluntary contributions to the statutory pension insurance scheme, with the minimum contribution at around €100 per month. Another, often used option is the Rürup pension (basic pension). It is characterised by the high tax deductibility of contributions – up to €29,344 for single people in 2025. Traditional private pension insurance offers flexibility for contributions and withdrawals. Here is an overview of the key features:
Statutory pension insurance (voluntary): Provides basic protection and entitlement to a reduced earning capacity pension after five years of contributions.
Rürup pension: Significant tax advantages during the accumulation phase, paid out as a lifelong pension, Hartz-IV-safe.
Traditional private pension insurance: Flexible contribution structures, capital option (annuity or lump sum) often possible, with deferred taxation of the earnings component.
Unit-linked pension insurance: Chance of higher returns through investment in funds, but it also carries higher risks.
The Rürup pension is particularly attractive for higher earners because of the tax savings. The choice of the right model should take your individual situation and risk appetite into account.
Optimising tax considerations: how the self-employed can save for retirement
Tax treatment is an important factor when choosing the right retirement provision. Contributions to a Rürup pension can be claimed as special expenses, which significantly reduces the tax burden during the accumulation phase; in 2025, this amounts to up to 29,344 euros for single persons. With traditional private annuity insurance policies taken out after 2004, taxation during the payout phase usually applies only to the taxable portion of the income, which is often more favourable than the full taxation of the state pension. Our expert tip: Check carefully which form of taxation is most advantageous for your income situation. Careful planning of how you contribute privately towards retirement can optimise your tax burden. The Riester pension also offers state allowances and tax advantages, but it is accessible to self-employed people only under certain conditions, for example if the spouse is directly eligible for support and you pay in at least 60 euros per year. The right structuring of your retirement provision expenses can therefore lead to significant savings.
Practical examples and calculations: making retirement planning tangible
Let’s assume that a 40-year-old self-employed person with taxable income of EUR 60,000 pays EUR 6,000 a year into a Rürup pension. They can claim these EUR 6,000 in full for tax purposes in 2025, which may reduce their tax burden by around EUR 2,000 to 2,500, depending on their individual tax rate. With a traditional private pension policy, with a monthly savings contribution of EUR 200 over 27 years (until age 67) and an assumed annual return of three per cent, capital of more than EUR 98,000 could be accumulated. The later pension payments or lump-sum payment are then taxed at the more favourable taxable portion. A pension calculator can help you compare different scenarios. Here are some typical considerations:
How large is my current pension gap? (difference between the income I need in retirement and the income I can expect)
What monthly contribution can I realistically afford? (e.g. ten to fifteen per cent of net income)
How much flexibility do I need in my contributions? (ability to make additional payments or pause)
What is my risk appetite for investments? (security-oriented or return-oriented)
These examples show how different retirement planning options can affect your financial future. Personal advice is often the key to success here.
Risk management and flexibility: indispensable for the self-employed
The financial situation of the self-employed can fluctuate more than that of employees. Flexibility in retirement provision is therefore an important factor. Many private pension insurance policies offer the option of adjusting contributions, making additional payments or even suspending them for a certain period. This is a major advantage over rigid savings plans. Another point is protection against risks. Income protection insurance, often combinable with a private pension insurance policy, secures your income if you are no longer able to work in your profession. Bear in mind that without ongoing income, retirement provision contributions are also at risk. The Rürup pension has the advantage of being protected in the event of insolvency or when receiving Bürgergeld (Hartz IV). Well thought-out income protection for the self-employed is therefore an integral part of a comprehensive retirement planning strategy. Choosing the right products secures your financial stability even in uncertain times.
Private retirement provision for self-employed people operates within a complex legal framework. The Act on Income from Retirement Provision (AltEinkG) of 2005 has redefined the tax treatment of retirement provision contributions and pension payments. It provides for a gradual transition to deferred taxation. For the Rürup pension, the certification requirements are set out in the Retirement Provision Contracts Certification Act (AltZertG). This ensures that only subsidised contracts meet certain quality criteria, such as payment as a lifelong pension from the age of 62 at the earliest. Current court rulings, for example on the appropriateness of costs or the transparency of contractual terms, continuously influence the market. Our expert tip: Stay informed regularly about changes in the law and relevant court rulings, or seek advice from specialists to avoid pitfalls and structure your retirement provision optimally. Knowledge of the legal framework is crucial for making sustainable long-term decisions.
Your next step: personalised advice for your optimal retirement planning
Designing a private pension is a very personal decision for self-employed people, with far-reaching financial consequences. There is no one-size-fits-all recommendation, as the optimal solution depends on your individual life situation, your financial goals and your willingness to take risks. With a contribution of just 100 euros per month, for example, you can already lay the foundations. A professional analysis of your situation helps you select the right building blocks and make the best use of tax advantages. nextsure, as a digital insurance portal, offers you comprehensive advice tailored to your needs. We help you cut through the complexity and create a solid foundation for your financial future. Take the opportunity to shape your retirement provision proactively.
Request an individual risk analysis now: Have your insurance situation reviewed free of charge and receive specific suggestions for optimisation.
More useful links
Federal Statistical Office offers information on employees in Germany covered by statutory pension insurance.
German Pension Insurance provides information for self-employed people on the German pension insurance scheme.
University of Duisburg-Essen (Social Policy – Current) offers a data collection on ageing and pensions in PDF format.
German Economic Institute Cologne publishes a study on wealth distribution and poverty in old age.
Federal Ministry of Labour and Social Affairs offers a research report on solo self-employed workers.
Federal Ministry of Finance provides information on the tax treatment of private retirement provision products in PDF format.
Wikipedia offers a comprehensive article on retirement provision.
German Pension Insurance provides a brochure on the protection of self-employed people through the statutory pension insurance scheme.
FAQ
What happens to my private pension if I am employed again?
Your private pension insurance usually continues as normal. You can usually keep paying the contributions as usual. With a Rürup pension, the tax advantages remain. It is advisable to adapt your retirement planning strategy to the new situation.
Can I cancel my private pension insurance?
Classic private pension insurance policies can often be cancelled, although usually with financial disadvantages (surrender value). A Rürup pension cannot be cancelled, but can be made paid-up.
How flexible are contributions to a private pension for self-employed people?
Many private pension insurance policies offer a high degree of flexibility. You can often adjust contributions, make additional payments or suspend contributions for a period of time.
What payout options are available for the private pension?
Common options are a lifelong monthly annuity or a one-off capital payment. Some contracts also offer a combination or flexible withdrawal plans.
Are the returns from a private pension insurance policy tax-free?
No, as a rule, not in full. If paid out as a pension, only the taxable earnings portion is taxed. In the case of a lump-sum payment from contracts taken out from 2005 onwards, half the gains are taxable if the contract has run for at least twelve years and the insured person is at least 62 years old.
What is the difference between a traditional and a unit-linked private pension insurance policy?
The classic pension insurance usually offers a guaranteed rate of interest and a guaranteed minimum pension. The unit-linked variant invests in funds and offers higher return opportunities, but also higher risks, as no guarantees are given on the capital.
