Vasco has been freelancing for ten years and takes pride in paying little Social Security. Whenever he can, he lowers his base to the maximum and pays the minimum. “It’s money that stays with me,” he says. And it is - for now.
What Vasco doesn’t see is that every minimum contribution today is a smaller pension tomorrow. A freelancer’s pension doesn’t fall from the sky: it results from what you contribute over your career. Let’s understand how it’s built - and what to do so you don’t reach retirement age with a pittance of a pension.
Yes, the freelancer is entitled to a pension
First, the essentials: a self-employed worker is entitled to the old-age pension from Social Security, just like an employee. The access conditions are the same - the legal retirement age and a guarantee period (a minimum number of years with contributions).
The difference isn’t in the right. It’s in how the pension is built - and in the choices only the freelancer gets to make.
How your pension is formed
Each month you contribute, Social Security registers a remuneration. The old-age pension is formed like this: a reference remuneration (worked out from the remunerations you registered, adjusted for inflation) multiplied by a formation rate that grows with your years of contributions - your career counts up to 40 years. For those who started contributing up to 2001 there’s a transitional rule: the pension combines a part based on the best 10 of the last 15 years with another based on the whole career. Two factors decide almost everything:
In other words: it’s not enough to contribute for many years; how much you contributed on counts too. And this is where Vasco’s choice will cost him.
The trap of always paying the minimum
The freelancer regime gives you two ways to pay less to Social Security in the short term:
- The minimum contribution (around €20/month) in low-invoicing quarters;
- The option to lower your base by up to 25% on the quarterly declaration (the subject of the guide on the -25% option).
Both ease cash flow today. But both register a lower remuneration in your record - and it’s your contribution career that sets your pension (the reference remuneration, multiplied by a rate). You save now, but “pull down” your future retirement.
- You pay less every month (immediate relief)
- Registers low remunerations in your record
- Smaller future pension
- You pay more now
- Registers real remunerations in your record
- Bigger future pension
This doesn’t mean lowering the base is always wrong - in a bad year, it makes complete sense. The mistake is doing it by default, year after year, without realising you’re trading a decent retirement for a few extra euros in the present.
The complement that cuts your IRS: the PPR
Since the freelancer’s public pension tends to be modest, many people top it up separately with a PPR (retirement savings plan) - a long-term savings product with a tax nudge.
The benefit: you can deduct 20% from your IRS (from the tax due) of what you invest in the year, with a cap that falls with age (art. 21.º of the Tax Benefits Statute, EBF):
The cap is per person - in a couple filing jointly, both can deduct if both hold a PPR.
Warning: the IRS discount is nice, but the PPR is for retirement, not a current account. If you withdraw the money outside the situations set in law (retirement, age 60, long-term unemployment, serious illness, incapacity, home-loan instalments), you have to give back the tax benefits you received, increased by 10% for each year that has passed (art. 21.º n.º 4 of the EBF). So: enter a PPR thinking long-term, not to “park” money you’ll need in two years.
✅ In summary
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The freelancer is entitled to the old-age pension, but its value depends on your contribution career - both the years and the amount of contributions count (with a specific rule for those who started contributing up to 2001).
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Always paying the minimum (or routinely lowering the base by 25%) eases things today and shrinks your pension tomorrow. It makes sense in a weak year, not as a habit. If you want a top-up, the PPR gives you a 20% IRS deduction (up to €400/€350/€300 by age) - but you only withdraw it without penalty in the situations set in law.
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With FIZ your contributions and the quarterly Social Security declaration stay up to date and you see the base you’re contributing on - so you decide with numbers, not by guesswork, how much you want to put towards your retirement. See the plans.
