Guide to German social security
Germany's welfare system was once the envy of other nations, but it has been hit by a funding crisis. We set out a guide to the social security in Germany.
Germany's once generous and comprehensive social welfare system is under pressure with a funding crisis resulting in part from the greying of the nation's population forcing the government to undertake major and unpopular reforms.People employed in Germany have to contribute to four principal social insurance schemes. The contribution is in general paid half by the employer and half by the employee. This also includes trainees and members of the armed forces and civil service. The contributions are:
- Rentenversicherung (Pension insurance): 19.6 percent
- Arbeitslosenversicherung (Unemployment insurance): 3.0 percent
- Krankenversicherung (Health insurance): 15.5 percent – 8.2 percent paid by the employee and 7.3 percent paid by the employer
- Pflegeversicherung (Nursing care insurance): 1.95 percent
Since January 2009, all governmental health insurance companies charge the same insurance rate. In February 2010, some health insurance companies started to charge an extra contribution of EUR 8 per month. This extra contribution is paid by the employee.
You can claim an old-age pension in Germany when you have reached an age between 65 and 67. But while the state pension remains the most important part of old-age income, the German Government has moved to encourage workers to supplement their state pensions with private retirement schemes by offering tax breaks.
This has resulted in a raft of new private retirement schemes hitting the pension market. These can be arranged through your bank or at almost any insurance company. But it is very wise to shop around to work out what policy suits you.
This reflects the concerns that as a result of the greying of the German population, the deficit-hit state pension scheme will not be able to meet the full demands of a future generation of retirees.
Not all self-employed people have to pay contributions. But self-employed artists, journalists and members of the publishing profession have to pay contributions if their income exceeds a certain amount. This is handled by the 'Kuenstlersozialkasse' in Wilhelmshaven.
There is an almost endless array of rules concerning the German pension system. But one important point is that you must pay contributions if you are self-employed and work primarily on a long-term basis for one major client or employer.
However, those starting a new business in Germany can be exempt from contributions for up to three years. Likewise in certain cases evidence that you have made provision for retirement may exempt you from making contributions.
You are also exempt if you are working less than 15 hours a week as in some cases are those working on short-term contracts.
The days of a pan-European pension scheme are a long way off. But under EU regulations, if you work in two or more EU countries, you should be able to combine state pension contributions paid in each state in order to qualify for a public pension.
Several countries including the United States, Canada and Australia have social security agreements with Germany allowing their citizens to make claims for benefits during the times they worked in both nations.
So it is worth checking out with your home social security authority whether this will help you and what paperwork you should keep.
Down and out in Germany
If you have the misfortune to become unemployed in Germany, you have to register with the local employment office or ' 'Agentur für Arbeit'. This needs to be done as soon as you receive your notice. Otherwise, you might lose the first months of employment benefits.
Some say they are often surprisingly helpful others have more grim experiences. EU citizens resident in Germany are generally eligible for social security and unemployment benefits but it seems you may face a battle to arrange what you are entitled to.
EU nationals living in Germany can also apply for 'Arbeitslosengeld II' (income support), and 'Wohngeld' (housing benefit) at their local 'Agentur für Arbeit'. Although you normally require a wad of evidence before the benefit is approved.
As part of its reform agenda, the government has moved to cut benefits for the long-term unemployed, attempted to speed up the process for people finding jobs as well as offering inducements for those without work to set up their own business.
Expatica / Updated by Martin Brune.
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