Social Security Agreements with Germany

Every nation has a different social security system, whereby every worker of a nation is subjected to some obligatory or voluntary social contributions to secure retired period of one’s life. The globalizations has increased the mobility of workers in different nations. In-order to dissolve the disadvantages for mobile workers in double payment of social security contributions, different nations have signed social security agreements and so did the Germany.

Contracting nations are those countries where the European Community provisions for the Social Security do not apply and have concluded social security agreements with Germany. According to the Deutsche Rentenversicherung Agency the following countries have concluded the agreements with the Germany - Australia, Bosnia Herzegovina, Canada/Quebec, Chile, Croatia, Israel, Japan, Macedonia, Montenegro, Morocco, Serbia, South Korea, Tunisia, Turkey and United States. China has also concluded a Posting of Workers Agreement. And recently India has also concluded Social Security Agreement which has already come into force.

What is a Social Security Agreement? The Social Security Agreement’s one important advantage is that if you satisfy the requirements of the minimum insurance period, Germany and your nation’s insurance periods are added together. The agreement specifies to which state you should pay your contributions when working in Germany and your nation.

To whom does the Agreement Apply? Many of the provisions of the agreements are applicable to you and to the nation of your permanent residence. It does provide some special provisions for the citizens of Germany and the agreed nation.

What does Social Security Agreement specify?

- Compulsory Insurance Obligation is defined by the state in which you are working. If you are employed in Germany, then you are subjected to Germany’s mandatory insurances irrespective of your nationality.

- Posting: If you are employed by your state and posted to work in Germany for a limited period not more than 60 months called Posting Period, then you are subjected to the compulsory insurances of your state and you are exempted from Germany’s compulsory Insurance Obligations. The exceptions to the limited posting period and some other exceptions to the agreed terms are subjected to agreement of German authorities upon the request filed by the employer and the employee. The Posting does apply to the self-employed people for a limited period. The same rule of Posting applies to those who are employed in Germany and work in the Contracting nations.

- Count of Posting Period: The Posting period in the contracting nation does count to your compulsory pension insurance i.e, if you are employed in your state and you are subjected to the compulsory insurance of your state and you are posted to Germany, then your posting period in Germany is counted towards your compulsory pension period in your state.

- Refund of Pension Contributions: If you are not a German national and if you were employed in Germany and paid for Pension contributions in Germany and decided to leave Germany forever, you can claim for the refund of Pension Contributions under the following circumstance

- you are no longer registered in the German pension system and you are not interested or not in a position to make voluntary contributions and 24 months have passed since you have terminated the registration.

- Basic Pension Requirements, benefits of Agreement:

Since the pension regulations vary from country to country and so does the pension age ranging from 60-67 in different countries, agreement helps you in benefiting from whatever the pension contributions you made either in your state or in Germany and if you do not fulfil the conditions in one country, the periods in another country shall be considered to make sure you indeed receive Pension.

The minimum insurance periods also known as Qualifying periods can be 5, 15 and 35 years. For all these periods, the insurance periods from your state are also calculated.

The Pension Amount: The agreement just helps in calculating the pension periods and meet the minimum pension requirements. The amounts of Pension you receive in Germany are solely on the basis of your German insurance periods. You need to claim separately for your state insurances and you claim those even thou you live in Germany or vice versa.

The point of contact for all of your queries regarding your insurances and entitlements in Germany are as follows:

Deutsche Rentenversicherung Bund: http://www.deutsche-rentenversicherung.de/

More detailed info in English at: http://www.deutsche-rentenversicherung.de/nn_97000/SharedDocs/en/Inhalt/06__formulare__info__broschueren/broschueren__friedemann.html

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:
http://epfindia.com/IntWorkers/IntWorkers.htm

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: http://www.epfindia.com/IntWorkers/IntWorkers_files/BelgiumAgree.pdf

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.

India signed Social Security Agreement with Luxembourg in September 2009. According to the agreement, for posted workers, for a detachment period of 60 months no social security contribution need to be paid under the Luxembourg law by the detached workers provided they continue to pay social security payment in India. If the detachment period continues beyond 60 months the competent authorities of the two countries or the competent agencies designated may agree to extend the period of posting. The provision of detachment is also applicable where a person who has been sent by his employer from the territory of one contracting state to the territory of a third country is subsequently sent by that employer from the territory of the third country to the territory of the other contracting state. The agreement shall also facilitate for the portability of social security benefits and also provides the totalisation of the periods of contribution for pension benefits.

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Important Links:
EPFOIndia
EPFO International Worker FAQ