Germany: Employee Benefits Update

May 2016: Asinta’s Partner in Germany, Profion, has reported back the following important changes in employee benefits this year so far:

  • Market Trends
    • Insurers and investment funds continue to face challenges in light of extremely low interest rates in Germany. Contracts that were concluded with high guaranteed rates of interest in the past are particularly challenging, as these higher rates of interest cannot be changed and must be maintained, even though the current interest rates are too low to earn profits with. It is possible that the interest rate will fall from 1.25% to 0.9% in 2017, if current proposals go through.
  • Changes in Retirement, Social Security & EU Directive 2014/50
    • The legal age of retirement in Germany has been increasing in a tiered system since 2012. Employees turning 65 in 2016 will need to wait to retire until they are 65 years and 5 months of age, if they wish to avoid reductions for early retirement.
    • The draft of the German law implementing the EU Directive 2014/50 on the portability of supplementary pensions is expected to be agreed on in 2016. Effective date, however, will be January 1st, 2018.
    • Social Security contributions have increased since January 2016:
Social security contributions employee employer over max. salary
State Pension System (retirement, survivors’, LTD) 9.35% 9.35 € 74,400,00
Unemployment 1.5% 1.5% € 74,400,00
Health Care (medical, sickness) 7.3% 7.3% € 50,850,00
Long-term / nursing care 1.175%-1.425% 1.175% € 50,850,00
Industrial injury / Workers comp.   0.6% -2% € 74,400,00
Total 19.325% – 19.575% 19.925%-21.325%