How Social Security has Evolved in Germany

According to HSCC’s 2019 Expat Explorer Survey, Germany was the 9th most popular country to move on. The Western European country ranked higher due to its education system, work/life balance, and economic stability.

When it comes to social security, Germany has marked its standard high. It not only offers several benefits to the residents but also welcomes expats with open arms. So, what exactly is social security, and how has it evolved? In this post, we will talk about everything in detail. So, let’s get into it.

What is Social Security (Sozialversicherung)?

Social security or (Sozialversicherung in German) means ‘Social Insurance.’ The majority of people working in Germany have to pay contributions to diverse insurance funds. These funds could be private or statutory and beneficial for getting long-term care, medical treatment, healthcare, pension, or unemployment benefits in Germany. Although social security is about paying 40% of net income, employers pay about half of it.

It includes a wide range of insurance programs such as:

  • Health Insurance (krankenversicherung)
  • Pension Insurance (Getsetzliche Rentenversicherung, GRV)
  • Unemployment Insurance
  • Long-term care insurance (Pflegeversicherung)

The main aim of this system is to make citizens live comfortably, even if they are retired, jobless, disabled, or sick.

German Social Security System- Background Check!

Germany is the world’s first nation to adopt the old-age social insurance program in 1889, designed by Germany’s chancellor Otto von Bismarck. However, this idea was conveyed by Germany’s Emperor William the First at Bismarck’s behest in 1881 in a letter to the German parliament. In the letter, he wrote, “those who are disabled from work by age and invalidity have a well-grounded claim to care from the state.” The main idea was to introduce social insurance in Germany to promote workers’ wellbeing to keep the economy operating at maximum efficiency. Also, the German system offered contributory disability as well as retirement benefits to the employees. According to this, it was essential for employees and employers to participate in the Social Security System. This contribution was taken from the government subsidies, employer, and employee. The sickness insurance was enacted in 1883, and the worker’s compensation program in 1884. Both these programs provide a comprehensive income security system to Germans based on social insurance principles.

Social Security Rights Enjoyed by People Living and Working in Germany

Germany’s constitution incorporated a set of measures called Sozialgesetzbuch (social code). It includes several clauses for expats living and working in Germany, such as long-term care, statutory pensions, statutory unemployment, and statutory accidents.

The Sozialgesetzbuch includes everything that Germans feel regarding neglecting vulnerable people. The system offers several cash benefits to recipients. The employer is liable to contribute severely handicapped insurances, maternity, statutory accident, and insolvency. It prevents employees from claiming other damages due to workplace setbacks unless the employer intentionally caused these.

Expats living and working in Germany with a gross salary of more than 450€ monthly are a part of the social security system. With this system, Germany sees all citizens, including expats to work and live safely despite their condition. Except for health insurance, the rest contribution will be divided equally between the employees and employers.

To know more about Social Security Rights in Germany, read here.

Do you have to live in Germany to enjoy German pension? (Pension for Expats)

Not necessarily! 

Germany welcomes expats to retire in the country because they are not relying on salary or jobs for financial support anymore. Expats moving abroad from Germany can transfer their pensions into a QROPS. The Qualified Recognized Overseas Pension Scheme (QROPS) enables expats to consolidate their pensions into a single plan. Moreover, it also helps them to manage their retirement funds while avoiding currency variations.

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