Pension provision for self-employed women with no BVG obligation

How Should Self-Employed Women Save for Retirement?

Pension provision for self-employed women depends on a number of things, including their company's chosen legal form, especially when it comes to the second pillar. It is often worthwhile to take out voluntary employee benefits insurance in addition to insurance against disability or death. 

Numerous women are self-employed for a variety of reasons. By being their own boss, they can run their own businesses as they see fit and have greater flexibility when it comes to managing their obligations at home and to their families. With all the advantages, many self-employed people forget, however, that they often earn less than regular employees. That has a direct impact on their pension provision.

What impact does the company's legal status have on pension provision?

In normal day-to-day business, it makes no difference whether an independent consultant or manager operates a sole proprietorship or a limited liability company. However, when examined from the standpoint of pension provision, the situations are quite different.

What self-employed women have employee benefits insurance?

Women who organize their business as a either a sole proprietorship or general partnership do not automatically fall under the Federal Act on Occupational Retirement, Survivors', and Disability Pension Plans (BVG). For that reason, they will only have employee benefits insurance if they arrange it themselves. An alternative is to set up a joint-stock company or a limited liability company. In that case, the business is generally required to join a pension fund.

Self-employed women with a sole proprietorship or general partnership can take out voluntary employee benefits insurance.

Can women voluntarily join a second pillar pension fund?

The book "Vorsorgen, aber sicher" (Secure Retirement Planning) from the Beobachter publishing company addresses this issue. It clearly states that even self-employed individuals in a sole proprietorship or general partnership can voluntarily take out employee benefits insurance with various providers, including their professional association's pension fund. If that is not possible, there is always the National Substitute Pension Plan, but this option is often the least attractive because, in many cases, individuals cannot insure their full salary.

For what other things should self-employed individuals take out insurance?

Retirement benefits are one thing; death and disability benefits are the other. For that reason, self-employed women should definitely have insurance for cases of disability and, to help provide for their family, against untimely death. Individuals who do not have major financial reserves urgently need daily benefits insurance to safeguard their livelihood. If a woman cannot work for medical reasons, this insurance will pay their income for a certain period.