To maintain the standard of living of the insured person and his standing in society in situations that threaten his livelihood this is the task of German social insurance. Only by following some fundamental principles are the German social insurance funds able to make up for lost income in case of an insured risk. The following gives you an overview of the most important of these basic principles:
In Germany nearly 90% of the population is covered by either compulsory or voluntary social insurance. Despite all the debates on possible reforms, the system of social insurance is widely accepted as the core of social security.
The social insurance schemes are primarily financed through contributions paid by employees and employers. Contribution rates are established either by the self-governing funds (in the case of accident insurance) or through legislation (for pension, unemployment, health and long-term care insurance). Contribution rates are based on the wage or salary of the employee.
Risks to be insured are borne collectively by the community of all insured persons. Irrespective of how much each person has paid into the social insurance system, all have access to comprehensive coverage. This solidarity-based approach creates an equilibrium between the healthy and the sick, between those at the bottom and the top of the earning scale, and between families and singles.
A further important basis of German social insurance is the principle of self-government. This removes the burden on the State by delegating tasks and areas of responsibility to the funds (subsidiarity principle). This means that the social insurance funds, as corporations under public law, take responsibility for all control tasks under the legal supervision of the State. These funds are thus organisationally and financially independent. The special aspect of this principle is that employees and employers participate directly in this system of self-government.
The principle of free movement was introduced within the European Union in the context of the Single Market. It entails the free movement of goods, services and capital within the EU Member States. This freedom, which at first contributed primarily to the pursuit of commercial objectives, initially affected only employers. But the regulation was subsequently expanded step-by-step, in order to give every citizen the option of moving freely throughout all EU Member States and settling in a chosen location. This right is granted to every citizen of the EU, regardless of his status as employee.
A further important principle is the equivalence principle . In the context of German social insurance, this principle applies only to pension insurance and describes the relationship between the amount of the contributions paid and benefits received by the insured person. In principle, the benefits depend on the amount of contributions paid by the insured person while gainfully employed.