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(Dec 01, 2009) On November 11, 2009, the German Federal Minister for Labor and Social Issues promulgated the 2010 contribution rate for the statutory old-age pension system. (Bekanntmachung der Beitragssätze in der allgemeinen Rentenversicherung und der knappschaftlichen Rentenversicherung für das Jahr 2010, BUNDESGESETZBLATT I at 3705.) In 2010, the general contribution rate for old age pensions will be 19.9% of an employee's wages, and the rate for the old age pensions of miners will be 26.4%. These rates have been effective since 2007. (Beitragssätze, Bundesversicherungsamt [German Federal (Social) Insurance Office] website, http://www.bundesversicherungsamt.de/cln_151/nn_1046662/DE/Rentenversich
erung/Beitraege/beitraege__node.html?__nnn=true
(last visited Nov. 24, 2009).) The 19.9% contribution for wage earners in general is split between employees and employers; miners contribute the same rate as employees in general while their employers contribute at the higher rate of 16.45% of wages. (SGB VI – Gesetzliche Rentenversicherung, Dec. 18, 1989, BUNDESGESETZBLATT I at 2261, as amended, § 168.)

On November 18, 2009, the Federal Cabinet published an old-age pension report for 2009, according to which it is estimated that contributions for the old-age pension scheme will remain at 19.9% until 2014, and pensions will neither be increased nor decreased during this period. (RENTENVERSICHERUNGSBERICHT 2009, Federal Ministry for Labor and Social Issues website, http://www.bmas.de/portal/40036/2009__11__18__rentenversicherungsbericht
.html
(last visited Nov. 24, 2009).) These estimates are based on the Pensions Insurance Sustainability Act of 2004 (Rentenversicherungs-Nachhaltigkeitsgesetz, July 21, 2004, BUNDESGESETZBLATT I at 1791), which aims at balancing the long-term stability of old age pensions with affordable contribution rates.

The German statutory old-age pension system is a defined contribution system in which the maximum contribution is guaranteed not to exceed 20% of wage income until 2020 and not to exceed 30% between 2021 and 2030 (SACHVERSTÄNDIGENRAT [GERMAN COUNCIL OF ECONOMIC EXPERTS], JAHRESGUTACHTEN 2007/2008: DAS ERREICHTE NICHT VERSPIELEN [ANNUAL REPORT 2007/2008: THE GAINS MUST NOT BE SQUANDERED] [in German] 175 (Nov. 7, 2007) available at http://www.sachverstaendigenrat-wirtschaft.de/download/ziffer/z252_287j0
7.pdf
). The system is unfunded, and current pensions are paid out of currently received contributions. Given the statutory limits on contributions, the size of the pensions depends on demographic and economic developments.

Author: Edith Palmer More by this author
Topic: Employee benefits More on this topic
Jurisdiction: Germany More about this jurisdiction

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Last updated: 12/01/2009