Calculated annually based on income development, the 2023 social security income thresholds for health insurance and pension contribution rates have just been released by the government.
The German government has released details of changes to statutory health insurance and pension insurance contribution rates, which will apply from January 1, 2023. Social security rates are calculated each year to make sure that the German social security system stays stable.
The ceiling for statutory health insurance contributions will rise to 59.850 euros per year (4.987,50 euros per month). This means that workers in Germany signed up to the state health insurance system must pay contributions on their salary up to this limit - and high earners especially will see their contributions rise in line with these new thresholds next year. Any earnings above 59.850 euros will not be subject to contributions.
The income threshold for compulsory insurance will also rise to 66.000 euros per year (5.550 euros per month). If you earn 66.000 euros or more per year in 2023 you can opt to switch to private health insurance. Only around 10 percent of people working in Germany have private insurance.
The threshold for contributions towards pensions is also set to change with the new year. As usual, the pension contribution rates differ across federal states. These differing rates are implemented to counter the remaining economic discrepancies between former East and West Germany and are gradually being made uniform over time. Pensions in former East Germany consistently increase by more than in former West Germany to gently even out the inequality.
In states across former East Germany (the so-called "new" federal states), the threshold will rise by 350 euros to 7.100 euros per month. In the "old" federal states of former West Germany, the threshold will be 7.300 euros per month, an increase of 250 euros. This means that almost everyone will see their pension contributions rise in 2023.
The average remuneration for pension insurance, which is based on the average earnings of all contributors and determines the “pension points” (Entgeltpunkte) every year, is set to increase to 43.142 euros per year for 2023.
Contributions based on a lower or higher income earn proportionately less or more pension points. Upon retirement, your pension points are used to calculate your pension benefits. If you choose to retire early or late, this will make your monthly pension payments go down or up.