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The main providers of accident insurance are the employers’ liability insurance funds, each of which comprises all the firms in a given trade or industry. Their funds come from contributions paid only by employers. Benefits can be claimed if the occurrence of an event insured against (accident at work, occupational disease) leads to injury, illness or death.

Events insured against, also include accidents which occur on the way to and from the place of work. If an insured person sustains accidental injury, the accident insurance fund bears the cost of treatment and pays injury benefits if the person is at the same time unable to work. If the person’s working capacity is reduced by at least one fifth or if the insured person dies as a result of the occurrence of an event insured against, the insurance fund pays a pension or a death grant and a pension for surviving dependents, as the case may be. The pensions are adjusted annually. Vocational rehabilitation benefits, under the accident insurance scheme, above all cover retraining measures designed to facilitate the person’s reintegration into the work force. The employers’ liability insurance funds are furthermore required to issue regulations on prevention of accidents and control of occupational diseases and to monitor their observance.

Pension insurance (Rentenversicherung). The statutory pension insurance scheme is one of the pillars of the Federal Republic of Germany’s social security system. It ensures that workers will be able to maintain an adequate standard of living once they have retired.

All wage and salary earners are required by law to be in the scheme. Self-employed persons who are not compulsorily insured by virtue of their membership of certain occupational groups can join voluntarily. Contributions (2000: 19.3 percent of gross earnings) are levied up to a certain income level (DM 8,600 monthly – DM 7,100 in the eastern German states and DM 7,100 in the new states). Employee and employer contributee half each.

The scheme pays old-age pensions and pensions for loss of working capacity as well. After the death of an insured person, the surviving dependents receive a proportion of the pension. There is a “waiting period“ governing eligibility for pensions; in other words, the individual must have participated in the insurance scheme for a minimum period of time. As a rule, the old-age pension is payable at the age of 65, but under certain conditions it can be drawn at 63 or 60 (whereby, in the future, the amount of the pension will be reduced as a matter of principle to offset the retiree’s earlier – and hence longer – receipt of benefits).

The size of the pension depends primarily on the amount of insured income from employment. The 1992 pension reform gave elderly employees greater flexibility in the transition from working life to retirement. They can now opt for a pension, an old-age pension as a part-pension and continue to work part-time. The Act to Promote a Gradual Transition of Elderly Workers into Retirement further broadened the range of options.

Since the 1957 pension reform, the average disposable pension after 45 insured years (basic pension) has risen to about 70 percent of the average worker’s net income. Such a pension has, since 1 July 2000, amounted to DM 2,020 in western Germany and DM 1,754 in eastern Germany. The average pension in 1999, owing to interruptions or discontinued payments during professional life, came to DM 1,228 in western Germany and DM 1,342 in eastern Germany. The pensions rise each year in line with wages and salaries; in 2000 and 2001, the pensions will be increased in line with inflation.

Owing to demographic trends, structural adjustments for pensions are necessary in order to secure a stable and social pension system. The German Federal Government’s goal with its pension policy is to ensure a balanced spread of the burden for pensions across the generations. The plan is to replace statutory pensions by capital-based old-age provisions.

Paying pensions is not the only purpose of the pension insurance scheme. It also helps to maintain a person’s working capacity or to improve or restore that capacity (rehabilitation). Thus it covers the costs and provides support for people who must undergo vocational retraining for health reasons.

Company pensions are a valuable supplement to the statutory scheme. Many companies provide them on a voluntary basis.

Unemployment insurance (Arbeitslosenversicherung). As a matter of principle, all employed persons (wage earners, salaried employees, homeworkers and trainees) are insured under the unemployment insurance scheme. Employees and employers each pay half of the unemployment insurance contributions. As a rule, persons who become unemployed receive an unemployment benefit in the amount of 60 percent (67 percent if they have at least one child) of their standardized net wages if they were in insurable employment for at least twelve months during the three years prior to the origination of their claim. The length of time that unemployed persons may draw unemployment benefits varies according to age.

Long-term care insurance (Pflegeversicherung). Long-term care insurance, which was introduced on 1 January 1995, supplements the existing social safety net in the event that a person requires long-term care. This insurance is compulsory: As a matter of principle, every person insured through a statutory health insurance fund also has long-term care insurance; persons insured through private health insurance funds must take out a private long-term care insurance policy. Long-term care insurance contributions are paid half by employees and half by employers; to offset the burden borne by business and industry, one paid legal holiday (Repentance Day) was eliminated in most of the states. Children who are still entitled to maintenance and spouses with very low incomes or no income at all are insured through the statutory insurance funds at no charge within the framework of the family insurance plan. At present, some 1.86 million people requiring care receive monetary support and other forms of assistance from the care insurance.

Family benefits. In 2000, the monthly child benefit for the first and second child was DM 270 each; the monthly benefit for the third child was DM 300 and DM 350 for each additional child. The tax-free child allowance was DM 3,024 for children up to the end of their 16th year. The tax-exempt allowance is DM 2,400 for children who are of age and are still undergoing education. Since 1986, mothers and fathers have also been entitled to a child-raising benefit for each child of DM 600 per month for a period of 24 months, provided their income does not exceed a certain amount. In addition, mothers or fathers wishing to look after their child themselves can claim up to three years child-raising leave from work during which they cannot be dismissed.

Integration of handicapped. Together with numerous private and public organizations, associations, Church social services, and a large number of voluntary helpers, the Federal Republic of Germany endeavors to enable handicapped persons to lead more-or-less normal lives in the community. The handicapped have a right to assistance as regards

medical assistance

vocational-promotion services

support for school and general social integration

financial support.
Especially in the case of vocational-promotion measures, a large number of public agencies are at hand: vocational education institutions, vocational assistance agencies, professional training centers, institutions for medical/vocational rehab and workshops for the handicapped. If the degree of handicap (usually ascertained by the official support agencies) is more than 50 percent, the handicapped person receives an ID card for the severely handicapped, which, among other things, guarantees protection at the place of work. All public- and private-sector employers with more than 16 employees are obliged by law to employ a severely handicapped person. If this does not happen, then under the terms of the “Act to Combat Unemployment among the Handicapped“ the employers have to pay a levy of a certain ratio.

War victims’ benefits and social indemnification for damage to health. Benefits under the social indemnification scheme for damage to health are paid to war victims, members of the armed forces, persons in alternative civilian service, victims of violence, victims of SED injustice, persons suffering from damage caused by vaccines, and other persons for whom the community as a whole has a responsibility to provide. They include a legal entitlement to a pension, which varies in amount according to the severity of the damage to health and is indexed to the general development of wages and salaries, as well as other benefits such as medical and vocational rehabilitation measures. As an exception, for the years 2000 and 2001, pension provisions under the social indemnification law, like pensions under the statutory pension schemes, will be inflation-linked. In the event that a person dies as a result of damage to health, his or her surviving dependents are entitled to survivors’ benefits.

Social assistance. Social assistance is provided in the Federal Republic of Germany for people who cannot help themselves and receive no help from others. Under the Social Assistance Act, everybody living in Germany is entitled to social assistance in times of hardship in the form of maintenance grants covering disability, illness or care. This assistance is partly provided by the municipalities and partly by the states. In 1998, social assistance expenditure totaled DM 45 billion.

Further information:

Bundesministerium für Gesundheit
(German Federal Ministry of Health)
Am Propsthof 78a, 53121 Bonn