The Local spoke with Berlin-based employment and migration lawyer Anne Glinka about all things welfare and social security.
So why should I pay?
Germany’s social security system will pick up the pieces if you lose your job or get sick and will help out if you have a baby. And if you stay here long enough, it will end up paying you a state pension.
The money for all this comes from your contributions, from those of other employees and self-employed people – topped up by employers and the government.
Do I have to pay?
If you are working in Germany as full time employee – no matter how long for – contributions are generally non-negotiable. Payment is automatic and is required by law.
Freelancers, anyone working less than 15 hours per week, and those on short term contracts, only have to pay health and care insurance by law – the rest is optional.
“It’s a legal requirement for freelancers to pay health insurance and care insurance, but not the other payments,” Glinka told The Local.
“But then of course they will not get a pension or unemployment benefits,” she added. “I would recommend freelancers pay into their own private pension plan.”
As a full-timer, said Glinka, it is sometimes possible to get out of paying the pension contribution if you can prove you have made alternative provisions for your retirement.
How much do I have to cough up?
It depends how much you earn. Monthly contributions to four separate social funds are calculated as a percentage of your gross income before tax.
If you are a full-timer, your payments are divided between you and your employer, with your share automatically deducted from your take-home pay.
The percentages are set regularly by the state. This is how they look in 2013:
1. Rentenversicherung (pension insurance): 18.9 percent – split evenly with your employer.
This fund will pay you a basic state pension if you find yourself still in Germany then – aged between 65 and 67. But, warned Glinka, if you are planning on staying, it’s always a good idea to top up the meagre state pension with a private plan.
2. Krankenversicherung (health insurance): 15.5 percent – you pay 8.2 percent and your employer 7.3 percent.
Paying into the public health insurance scheme gives you access to hospitals, doctors or Germany’s wide range of other health professionals. Usually, as a full-timer, your employer lets you choose a public insurer, you fill in a form and then your company will organise your payments.
If you are freelancer you have to get insured privately and it’s generally harder to get onto public insurance schemes.
NB: Freelance artists, musicians or those in publishing professions (writers, translators, journalists) can apply to get into the state-funded Künstlersozialkasse (KSK). The KSK acts in place of an employer, sharing payments with freelance artists – it can also handle payment into the state pension fund.
3. Arbeitslosenversicherung (unemployment insurance): three percent – split evenly with your employer.
This money will be useful if you lose your job after at least one year of full time employment. From this fund, the state will pay you a monthly benefit at 60 percent of your previous pay for a period of time depending on how long you’ve been paying unemployment insurance. If that’s one year, you get six months, two years, you get a whole 12 months.
4. Pflegeversicherung (long-term nursing care insurance): 2.05 percent – you pay 1.025 percent and your employer pays the rest.
This fund goes towards helping cover long-term assistance and nursing costs for elderly or disabled people who cannot afford it themselves.
What if I’m a freelancer or registered self-employed?
Freelancers or those running their own business are only required by law to pay health and care insurance – and are granted more flexibility when it comes to pensions or unemployment. Payments are tax deductible.
What happens if I leave Germany?
If you’ve only worked in Germany a short time and don’t plan to return, you may be able to get your money back – if you permanently return to your home country and after a two year waiting period.
“If you’ve worked here less than five years you can apply to the German embassy in your home country to apply to get back the full amount of your contributions,” said Glinka.
Among others, the United States, Canada and Australia have agreements with Germany allowing people who have worked in both nations to claim a kind of pension cobbled together from contributions from both countries. Check with your home social security authority to find out more.
A few rules, however, said Glinka, unfortunately can make it relatively tricky to get a refund. “After you have worked here for five years there is no entitlement to your payments if you return home,” she said.
“Also periods for which you have not paid contributions on your own (for example periods of child-raising) are taken into account. As a result only in very few cases contributions can be refunded, but it does happen,” said Glinka.
Josie Le Blond