The benefits provided by statutory pension insurance can be divided into two main areas. The first of these, the payment of old-age pensions, has been among the central tasks of the statutory pension insurance system ever since its inception. But as further aspects in this area, the insurance scheme provides those covered with substantial protection from the consequences of reduced earning capacity or the death of a spouse. The second major mission of pension insurance is rehabilitation. Rehabilitation strives to positively influence the ability of ill or disabled persons to participate in gainful employment and - whenever possible - to restore full earning capacity.
As a form of income replacement, pensions are designed to offer insured persons an adequate livelihood after retiring. Pensions are usually provided as:
Unlike with the other pillars of social insurance, the extent of benefits that can be claimed under pension insurance depends on the amount of contributions paid (equivalency principle).
The old-age pension allows every insured person to retire from active working life upon reaching a certain age and receive an adequate pension on which to live. The decisive factor determining the amount of pension received is the income earned during the entire contribution-paying period. In order to claim a retirement pension, the insured person must have reached a set age and have paid contributions for a specified minimum qualifying period, and have applied for a pension. Standard retirement age is 65. A pension can be claimed at an earlier age only if certain conditions are met, and taking into account deductions calculated using the current actuarial formulas. An insured person can apply for a pension at the earliest upon reaching 60 years of age. Pension recipients may also be compulsorily insured under the Pensioners Health and Long-Term Care Insurance Scheme. This means that they are also protected in their old age against the financial consequences of illness and the need for long-term care. Old-age pensions come in the form of:
As of 1 January 2001 the earlier division of pensions on account of reduced earning capacity into occupational disability and invalidity pensions was replaced with one graduated system of pensions for reduced earning capacity. With this system, the claim to pension depends on whether the insured person is unable to work for medical reasons. The decisive parameter is how many hours the insured person can work per day during a 5-day workweek. A person is regarded as having reduced earning capacity if he is unable to work more than three, or only between three and six hours per day. Such persons receive either the full-rate reduced-earning-capacity pension (under three hours) or the half-rate reduced-earning-capacity pension (three to six hours).
A further central principle of statutory pension insurance is the importance of rehabilitation (the task of providing participatory benefits). Rehabilitation measures are designed to restore a persons ability to actively participate in the workforce, preventing early retirement and the need to start paying pension benefits prematurely. The basic tenet here is "rehabilitation comes before pension". Rehabilitation benefits include medical and other assistance designed to promote participation in working life and restore the earning capacity of ill or disabled persons. This includes, for example, treatments in a rehabilitation clinic or retraining for a job more suitable for the insured persons abilities. The aim of rehabilitation is to counteract any limitations on earning capacity caused by illness or physical, mental or emotional disability, endeavouring to prevent or overcome such adverse effects in order to allow for lasting re-integration into gainful employment. If the insured persons earning capacity has declined to a great extent as a result of illness or disability and rehabilitation does not promise to improve matters, pension insurance steps in to grant pensions on account of reduced earning capacity (see above).
