There’s an old law from 1913 that will interest you if you’re a freelance teacher in Germany. It’s from §2 of Book 6 of the German Social Code, it covers the Statutory Pension System in Germany, and it goes a little something like this:
Versicherungspflichtig sind selbständig tätige:
- 1. Lehrer und Erzieher, die im Zusammenhang mit ihrer selbständigen Tätigkeit regelmäßig keinen versicherungspflichtigen Arbeitnehmer beschäftigen,
Roughly translated:
Obligated to pay into the statutory pension insurance are self-employed
- Teachers and educators that do not regularly employ persons subject to mandatory insurance requirements in association with their self-employed work activities,
This law also obligates midwives, fishermen, artists and a few other professions to do the same. No-one really knew much about it until it was suddenly revived in around 2000, and freelance teachers across Germany were getting payment requests left right and centre, some of them backdated for up to 4 years.
It’s a bizarre topic that crops up every now and then and causes waves of panic among the freelance teaching community in Germany, and for very good reason. Freelance teachers sometimes have to survive on a quarter of the wage that might be afforded to their employed colleagues, and they fork out 100% of their health insurance, which can be costly enough. To also part with an additional 19% of a freelance teaching income per month for the pension can be the decider between profit and loss at the end of the month.
To add insult to injury, most freelance professions are exempt from mandatory payment requirements – they’re optional in the statutory system, and they can choose a private plan if they prefer.
What kind of teachers have to pay into the statutory pension insurance?
All of them, if they are primarily self-employed and they make a profit of more than 450 Euros per month or 5,000 Euros per year from teaching. Yoga teachers, golf teachers, English teachers, Spanish teachers, German teachers, fencing teachers, dance teachers. If you’re a teacher, you’re self-employed and you make more than 5,000 Euros a year as a teacher, you are probably covered under this law.
How do they find me?
The German state pension system doesn’t seem to be actively sending out reminders to random teachers, and there is surprisingly little outrage on the internet about this topic since around 2011. If you don’t make contact with the DRV (Deutsche Rentenversicherung) then they probably don’t know you’re around, unless someone rats on you. If you make contact with them for any other reason, that might put you on their radar. Or they might audit a particular education institution that happens to be one of your clients.
If you’re a non-EU citizen with a freelance permit and you get a case worker who is particularly on the ball about this law, they *could* bring this up at your renewal appointment and ask you to provide proof of payment into the statutory pension fund before they renew your permit. I’ve only ever heard of this happening once in five years, and it wasn’t in Berlin. If it does happen and you haven’t been paying your pension payments, you’re in a sticky situation. Let’s hope that never happens!
What do I do if they find me?
Contact a lawyer that specialises in Sozialrecht. There are some cases of exemption due to hardship, or they might be able to negotiate the amount that you pay in.
Alternatively, you can hire someone and pay them more than 450 Euros a month so that you’re paying their social contributions. The law says you are only obligated to pay into the pension if you do not regularly employ someone who is subject to mandatory social contributions in association with your work activities.
Will I ever see the money I contribute?
If you stick around in Germany for five years, you’re entitled to a pension in Germany. If not and you leave the country earlier, you might be able to get it partially transferred into another country’s pension scheme. The details of how this works and how much you actually get back are a bit hazy and depend on a lot of factors, so contact a lawyer or the DRV directly to find out more about your specific situation.
As always, if you need help communicating in German, writing letters or making phone calls, get in touch!
Hello,
I am currently working as a freelance English Language Coach for a firm based in Madrid. I work from home in Munich. I will be 59 in July and was wondering if I am obliged to pay into the German State Pension Fund.
Until March of this year I have paid into the Spanish and before that the Dutch State Pension Fund as I was living in those two countries prior to moving to Germany.
Any information or help on this matter would be greatly appreciated.
Regards,
Richard Lateano
Hi Richard,
I do know that freelance “teachers” ARE obligated to pay into the German pension system, but I do not know if wording your job as a “language coach” exempts you, nor do I know if you’d be exempt because you have been paying into the fund of another EU country. In a nutshell, that sounds a bit out of my area of expertise. Maybe talk to an English speaking insurance broker like Keith Tanner at crcie.com or John Gunn at gunn-partner.com – good luck! Cheers, Kathleen
I’ve looked into this. The wording doesn’t make any difference. They have a deficit of around 18 billion Euros and resurrected this old law to squeeze every freelancer dry – regardless of job title. As for your contributions made in other countries – if they were EU countries, they’ll be accounted for in the same way (no difference). I hope that helps. It seems it might be better to have a private pension from a well-established and highly reputable provider.
Hi Shaz. I wish I had answers for you there, but I am no expert in how pensions work, especially and also when it comes to widow’s pensions and what to disclose or not disclose, or how far back you have to go when giving them information, or how many years they are allowed to ask you to backpay for your teaching work if they are even entitled to do so. If you want to talk to someone in English about the situation, I would highly recommend Keith Tanner (crcie.com), or, if you want a lawyer, I believe Anne Glinka (glinka-rechtsanwaeltin.de) does this sort of stuff. I hope it all works out OK for you and that your kids are well and that you sort out the widow’s pension stuff. Cheers, Kathleen
So I have run into a small problem like this. I will be in Germany less than a year teaching I also don’t exactly make enough to cover the payments…what happens if I don’t pay?
If they find you, they can demand contributions, even back-paid for a certain number of years, but if you don’t contact the pension office and thus get on their radar, your chances of being “found” are slimmer…. unless, of course, they audit an organisation for which you work/worked as a freelancer. It’s income-based, by the way, so the less you earn, the less you need to pay them. If you earn 10,000 per year as a freelance teacher, the contribution would be around 1890 per year (in theory). Plenty of people come to Germany, work as a teacher, leave the country and never get contacted. Some people do get contacted. No guarantees, unfortunately!
I’ve not paid a penny into this Deutscherentenversichering all the years I was freelancing here. I could barely afford to pay my health insurance, let alone this too! I also had children to bring up. Now I’ve received a letter from them, and it’s scaring the crap out of me. I don’t want to be crippled with a huge bill. Thank goodness I’m employed now, but I think I received this because I’m now 54. I don’t know if the small private widow’s pension I get will affect any of this and, if so, how? Is it best I don’t tell them about this? I don’t want i to be deducted from whatever I might get. Also, can I receive the widow’s pension from them as well as the small one I receive now? The private one I receive isn’t much but it’s a help. Can I receive both? My husband died years ago (he was German), and I had no idea that I could have receive a state widow’s pension – my lawyer didn’t tell me. I was also bringing up children alone when my husband died – the youngest was 4.
Hi,
I have recently started as a yoga teacher and super confused. Currently I earn less than 450 euros but I know it can easily go up if I want. I am on a dependent visa and my insurance is also taken care by my husbands company. If I cross this bracket will everything change for me?
Also if I find a full time job and do this part time, will I still have to contribute from the yoga teachers earning again to the rentnerversicherung?
Hi Sneha. If you cross this bracket, then yes, everything will change, but the bracket is now 520 EUR per month instead of 450. Also, it’s profit, not revenue. If you have a full-time job and do this on the side, then your pension payments and health insurance will come out of your full-time job. Freelancing on the side and working full or part-time in an employment relationship is a very common way for freelancers in Germany to make it work! Or… keep your profit under 520 EUR to maintain the status quo.