Expats in Germany can make use of the generous German social security and employee benefits. Germany’s social security system is an elaborate one and it strives to help its citizens to live in a comfortable manner whether their reason not to work is due to a disability, illness, unemployable or retired.
People working in Germany, by law, have to make payments to four different sectors being; health insurance, unemployment, pensions and range nursing care. Such payments are about 40% of the employee’s gross income, however, in most cases the employer covers half of the cost meaning that the employee will only have to fork out only 20% from her/his gross income.
Social security tax depends on the amount of income generated meaning that the higher the income, the greater the amount that must be paid. This, however, increases up to a certain limit. Other benefits include company accident insurance which is covered by the employer and the social indemnity which is covered by state.
Employee contribution rate %
- Pension Insurance: 9.45%
- Health insurance: 2%
- Unemployment: 1.5%
- Sick pay insurance: between 1.5% and 3.6%
- Invalidity insurance: 1.025%
The pension insurance is there to ensure that the employees will have a decent standard of living once they reach the age of 65 and stop working. By 2029 it is expected that the age required to receive pension will gradually increase up to 67 years old. The highest amount of pension benefits one can receive amounts to 67% of the average net income during the employee’s working life. When expats return back to their home country, the pension entitled will be send there.
The German health insurance, also known as the sickness insurance, covers things such as hospital stays, dental care, drugs and x-rays. Public health insurance is mandatory in Germany unless the employee earns above a fixed sum of €4,687.50 per month. The employees then have a choice to either remain in the statutory health insurance plan or opt for a private insurance. This does not stop the employer from contributing around half the premiums of the private insurance. Self-employed people can also choose to have the statutory health insurance in some circumstances and regardless of their income, they can opt for a private health insurance plan. See our insurance section to get more information about the best insurance companies in Germany.
This benefit can be received by people that have paid their premiums for at least a year during the past five years. In order for an employee to receive a percentage of their most recent income they have to register with the Labour Office and be available to the provided placement service if they have the necessary experience and training. The duration of the payments depends on the time the previous employment and the employee’s age. Apart from the monthly sum received as unemployment benefits, the unemployed citizen will also have allowances for housing and other things which are crucial for survival.
Sick pay Insurance
These benefits include illnesses and/or accidents that are incurred at the place of work or job incurred. This also covers the employee’s children illnesses or accidents incurred on the way to school or at school. These benefits cover the treatments, recuperation time, pensions in the case of invalidity and funeral expenses in events of death.
This includes all the people that are considered a public liability. This is paid by the state and includes all the people with disabilities make them incapable to work including, disabled war veterans, soldiers with mental or physical health problems, victims of violent crimes and people born with natural disabilities.