Germany

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RELOCATION
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Social Security System
The welfare state is undergoing massive reforms. Here’s what you should know
about what the state can do for you ... and what you must do for it.
Germany's generous, comprehensive cradle-to-grave
social welfare system was
once the envy of many nations. But now
the state has been hit by a funding crisis,
resulting in part from the greying of the
population, forcing the government to
undertake major and unpopular reforms.
People employed in Germany - including
trainees, the military and civil servants -
must contribute to four principal social
insurance schemes. Half the contribution
is paid by the employer, half by the
employee.
The contributions are: Rentenversicherung
(pension insurance), 19.5 percent;
Arbeitslosenversicherung (unemployment
insurance), 6.5 percent;
Krankenversicherung (health insurance),
14.3 percent (average); and
Pflegeversicherung (nursing care insurance),
1.85 percent (1.7 if you have children).
EXEMPTIONS
If you’re working fewer than 15 hours a
week, or in some cases on a short-term
contract, you will not have to pay contributions.
Some self-employed people are
also exempt, but artists, journalists and
workers in publishing must pay if their
income exceeds a certain amount. This is
handled by the Künstlersozialkasse in
Wilhelmshaven. Since 1 January 1999, selfemployed
people working primarily on a
long-term basis for one major client or
employer must also contribute.
Those starting new businesses in Germany
can be exempt from contributions for up
to three years. In certain cases, evidence
that you have made provision for retirement
can also exempt you.
The days of a pan-European pension
scheme are a long way off, but if you work
in two or more EU countries you should
be able to combine contributions paid in
each to qualify for a pension.
BENEFITS
Several countries, including the United
States, Canada and Australia, have social
security agreements with Germany allowing
their citizens to claim benefits. It’s
worth asking your embassy if this will
help you, and which papers you’ll need.
If you become unemployed in Germany
you must register with the local employment
office or Arbeitsamt. Some say they
can be surprisingly helpful; others’ tales
are grimmer.
As part of Schroeder's reform agenda, the
last government 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.
EU citizens resident in Germany are generally
eligible for social security and
unemployment benefits. They can apply
for Sozialhilfe (income support), and
Wohngeld (housing benefit) at their local
Sozialamt — but a wad of evidence is usually
required before a benefit is approved.
You can claim an old-age pension at age
65. While this remains the main source of
old-age income, the government has
begun offering tax breaks to encourage
workers to supplement it with private
retirement schemes. This reflects a worry
that the deficit-hit pension scheme will be
unable to meet future demands.
The result: a raft of new private retirement
schemes has hit the pension market. These
can be arranged through banks and most
insurance firms; it is wise to shop around
to see which policy suits you.
GERMANY EXPAT SURVIVAL GUIDE WWW.EXPATICA.COM