Financially speaking, self-employed have been especially hard hit by the coronavirus pandemic. This also affects their old-age provision, which those surveyed now have less money for than before the pandemic. As a result, they are very concerned about old-age poverty. A majority of those surveyed would support mandatory insurance for self-employed. These are the main findings of a survey of 511 self-employed working in Germany, which was conducted by YouGov on behalf of ERGO in June 2021. The survey marks the start of the ERGO Blickpunkt study series, which ERGO uses to shed light on current social issues.
Not only in their private lives, but in many cases also financially, self-employed are especially hard hit by the coronavirus pandemic. Of those surveyed, 61% reported being financially impacted by the effects of the coronavirus pandemic, while one in five (20%) is in danger of going bankrupt. In addition, 49% of respondents now earn less than they did before the pandemic, and 3% currently have no earnings whatsoever.
This also affects their old-age provision: nearly half (46%) of the self-employed surveyed stated that, as a result of the pandemic, they now had less or no money to put away for their old age. In fact, nearly one in ten (9%) had to draw on financial reserves originally intended for their old age.
Major concerns about old-age poverty
As a result, German self-employed are very concerned about old-age poverty. Nearly half (49%) of those surveyed said they feared not having enough money in their old age. What's more, 43% now assume that they won’t have sufficient savings in their old age.
Nearly half (46%) of respondents would support mandatory pensions for self-employed, a step currently being considered by Germany’s federal government, so as to enjoy more financial security in their old age.
Federal government called upon to take action
Even before the pandemic, private pensions were especially important for self-employed, who had little or no claim to social benefits. Nevertheless, until recently more than a third (37%) of those surveyed eschewed private pensions.
“The survey shows once again just how important private old-age provisions are in shielding self-employed from the risk of old-age poverty”, explains Michael Fauser, Chairman of the Board of Management of ERGO Vorsorge Lebensversicherung AG. “Accordingly, mandatory insurance for self-employed is unavoidable. The results of the survey are a clear call to action for the incoming administration in Berlin to solve this problem in a timely manner.”
Optimal old-age provisions need to be flexible and easy to understand
If mandatory old-age provisions were introduced in Germany, more than half (58%) of the self-employed surveyed would want them to include integrated protection from the seizure of their savings in the event of unemployment. More specifically, 52% want flexibility in terms of premium payments, while 42% want the products to be easy to understand and offer a secure form of investment.
When asked what tailored old-age provisions should look like, roughly two-thirds (64%) of respondents answered that they should offer security. Some 44% wanted flexibility during the pay-out phase; 38% during the pay-in phase. For nearly a third (31%) of those surveyed, optimal old-age provisions should offer higher returns on investment by more actively tapping the opportunities offered by capital markets, for instance.
“In this regard, flexibility also includes the free choice of products,” Fauser adds. “A standard product offered by the state doesn’t fit the varying pension-related needs of those surveyed. Consequently, we need to make old-age provisions mandatory, combined with individual choice of products, in order to best meet everyone’s needs.”
About the survey
From 1 June to 7 June 2021, YouGov surveyed 511 self-employed working in Germany on behalf of ERGO with regard to the financial repercussions of the coronavirus pandemic and old-age provisions.
