General information about German social security
The German social security system can be divided into 5 parts:
Each employee with a German employment contract or working in Germany becomes, with some exceptions, liable to all of this parts of German social security.
Contributions to pension insurance, unemployment insurance, health insurance and care insurance are paid half by the employer and half by the employee, the companies accident insurance is paid only by the employer. For calculation of the monthly contribution to pension insurance, unemployment insurance, health insurance and care insurance special ceiling amounts apply. This means that contributions are only calculated up to a maximum amount, exceeding earnings will remain free of social security contribution. Depending on if the work is provided in former West Germany or former East Germany in 2006 the following ceiling amounts of earnings apply:
Former West Germany:
Pension/unemployment insurance: € 5,250 monthly/€ 63,000 annual
health/care insurance: € 3,562.50 monthly/ € 42,750 annual
Former East Germany:
Pension/unemployment insurance: € 4,400 monthly/ € 52,800 annual
health/care insurance: € 3,562.50 monthly/ € 42,750 annual
Important for the calculation of contributions is the annual ceiling amount. This means that on extra payments, although exceeding the monthly ceiling amounts, contributions have to be paid if in former months the ceiling amounts are not met.
The below mentioned social security rates apply (up to the ceiling amounts) in general on the gross salary. Allowances paid tax free according to German tax law are also social security free.
For 2006 the social security rates are as follows:
Pension insurance: 19.5 %
Unemployment insurance: 6.5 %
Health insurance (average rate): 13.7 %
Care insurance: 1.7 %
As told above these contributions are paid half by the employer and half by the employee. A good page for calculation of monthly contributions in English language is www.german-taxation.de.
The amount of health insurance contribution is depending on the chosen health insurance company. Also, if the ceiling amounts are met, employees have the possibility of either being insured with a governmental health insurance company on a voluntary basis or being insured with a private health insurance company or being not health insured at all. The contribution while being voluntarily insured are calculated as shown above. If you are insured with a private company, the amount of contribution is depending on your age, actual health and your family situation.