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You are here: Home Finance & Business Pensions & Insurance Are you eligible for insurance refunds?

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30/07/2003Are you eligible for insurance refunds?

For Americans working in Europe there could be some good financial news. As Matthias Henne and Marie-Hélène Hoffmann report you could be in for a refund of German Social Insurance contributions.

US citizens who work in Germany and who are not eligible for a certificate of coverage under the US-Germany Totalization Agreement must pay in the German Social Insurance scheme while employed in the country. A frequently asked question is: What happens when you leave Germany to return to the US or to work in a third country? What is refundable? A refund of the portions of the contributions relating to health and unemployment insurance is of course not possible, since these are term benefits you actually enjoyed during the period of your employment. The portion of the social insurance contributions that is deposited into your pension account in order to fund future retirement benefits, however, retains its value after cessation of your employment. Were the account simply frozen and not distributed until retirement, it would, in the case of short periods of employment in Germany, yield very small monthly pension payments. To prevent this, you have the right to obtain a refund of your pension contributions. This only applies to employees' contributions; the employer's matching contribution is not refundable. Also, if your employer paid your contribution under a net salary agreement, the refund opportunity inures to your employer, not to you. You may request a refund as long as you did not pay into the German Social Insurance for more than five years. If you spent more than five years working in Germany, you are not eligible and will instead receive a German pension upon reaching retirement age. It is important to note that, contrary to a widespread belief, there is no minimum period of employment to be eligible for the refund. How to apply You must wait 24 months after terminating your employment in Germany before submitting your refund application. Additionally, you must not be a resident of Germany at the time you file your application. Mail the application to: Bundesversicherungsanstalt für
Angestellte (BfA)
D-10704 Berlinb The BfA also provides the application forms. It may be a good idea to request the forms prior to your departure from Germany. You must submit a notarised copy of your passport with the application. A Notary Public or a German consulate or embassy can perform the notarization. What you must also consider Applying for a refund is not always the better alternative. In doing so, you are not only forfeiting your right to a German pension, but you give up another right as well: Under the US-Germany Totalization Agreement, it is possible, in certain cases, to aggregate your accrued German pension coverage periods with your earned US coverage periods in order to compute your US retirement benefits. Opting for a refund now means forgoing that opportunity. For this reason, the decision whether to apply for a refund or maintain your eligibility for a pension under the German Social Insurance scheme should be made carefully. Individual circumstances vary and we recommend seeking expert advice should you have any doubt as to what the best plan of action would be.


1 reaction to this article

Admin @ Germany Mantra posted: 2010-10-06 14:35:08

Indians who are looking for consultancy on social security refund, please visit.
http://ssr.GermanyMantra.com

Above website also provides updated information and answers to FAQs

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1 reaction to this article

Admin @ Germany Mantra posted: 2010-10-06 14:35:08

Indians who are looking for consultancy on social security refund, please visit.
http://ssr.GermanyMantra.com

Above website also provides updated information and answers to FAQs

Add a comment
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