Monday, November 2, 2009

India pens the Social Security Agreements with Germany, Switzerland, Netherlands and other European Countries

Well, it has been almost an year that I tread into Germany after working as Accounts Manager in India, and one of the things or I should say the only thing that I impressed me a lot is the Social Welfare System of the Germany. It is quite an elaborate and comprehensive system. People employed in Germany have to contribute to four principal social insurances whereby employee pays half while the employer contributes for the other half. The contributions are:
  • Pension Insurance: 19.5 %
  • Unemployment Insurance: 6.5 %
  • Health Insurance: 14.3 %
  • Nursing Care Insurance: 1.7%
The Health Insurance and Nursing Care Insurances privileges you can claim whenever you needed a medical service in your day-to-day life. The Unemployment Insurance privileges can be claimed once you are down and out  (Jobless) in Germany. You can claim the Pension Insurance only once you have reached 64. Well most of us Indians do come to Germany for work temporarily, yet entitled to pay the pension insurance which God knows if we can claim it once we leave Germany.

I have been wondering when we stay here temporarily, what's the funda to pay Pension Insurance which we are not sure if we can claim it. 19.5% is quite high, isn't it?

Well, answering to my queries and bringing relief to everyone who come to Germany temporarily, the Government of India has signed Social Security Agreement with Germany on 7th October, 2008. This Agreement shall exempt the nationals of either countries (Germany and India) working in either countries from social security contributions. But the exemption is given only to those on short-term contracts for a period of FOUR years, extendable to ONE more year. The agreement provides for portability of the benefits at the time of relocation for those who are self-employed and have lived longer, but they have to contribute for the social security system of the host country.

Officially, this agreement should have become effective from 1st October 2009, yet Employee's Provident Fund Organization of India has not updated with this regard.
Check this link for further updates:

But for sure this agreement shall protect the interests of all those professionals who are sent from India to many German companies or subsidiary of German-based companies in India or subsidiary of Indian-based companies in Germany for short term contracts up to 48 months.

Well, though I have highlighted the Germany's case, this has been true with some other European countries too.

Indian Government has signed a Social Security Agreement with Switzerland on 03 Sept, 2009. This agreement shall allow the nationals of one country who are working in the other on a short term basis - not more than 72 months - to be exempted from social security contributions in their host nation.

India signed a Social Security Agreement with Netherlands on 22 October, 2009 to facilitate the exchange of professionals between the two nations. The detached workers sent by Netherlands-based companies to their Indian subsidiaries, or those sent by Indian companies to their branches in the Netherlands will be exempt from social security contribution in the host country for a period of 60 months. This agreement provides that an employed or self-employed person, other than detached workers shall be subject only to the legislation of the host country. The agreement provides for portability of the benefits at the time of relocation.                                    

India and France have signed Social Security agreement on September, 2009. The agreement will ensure that short-term workers of 60 months will be exempted from social security contributions on reciprocal basis. It will also allow exportability of pension benefits, which will mean that workers can avail of pension benefit even if they change their residence between the two countries. The agreement will also allow the totalisation of periods of contributions made in both countries for calculating eligibility of pensionary benefits.

India has announced that the Social Security Agreement with Belgium has come into effect from 1st September 2009. The agreement allows the employees of the home country deputed by their employers in the host country for a short term contract less than 60 months, need not remit social contributions in the host country. The Agreement also allows the export of pension due under the legislation of one country to the other country, where the member chose to live is possible and also the totalisation of the contribution periods earned while in service in both the countries for the purpose of deciding eligibilty to benefits is possible. Check this out for more information:

India has also signed similar agreements with Denmark in August 2009. This agreement shall open up opportunities for Indian skilled workers, including Doctors and Nurses to work in Denmark. The agreement shall also provide cooperation between India and Denmark in the areas of labour market expansion, mployment facilitation, orderly migration and exchange of information and cooperation in introducing best practices.


  1. well we miss you here in India Seema :)

  2. Well, the note Indo-German agreement was a good one.

    I have recently signed an agreement/contract with Fujitsu Semiconductor Europe GmbH, Langen(Hessen). There is no end date for the contract period. I am now filing for my work-visa from the German Consulate in Kolkata, India. I want to stay and work in Germany for not more than 3 or 4 years.

    Now whom should I contact, so that I am exempted from the 19.5% Pension Insurance in Germany.

    Any suggestions?