Ruling Establlished: Contributions Made Willingly Not Factor into Minimum Pension Entitlement - Contributions made voluntarily do not fall under the category of fixed pensions
Breaking Down Pension Contributions: Voluntary vs. Compulsory
In Germany, there's a significant difference between voluntary and compulsory contributions when it comes to pensions, due to the structure of the pension system and the role of voluntary contributions within it.
Mandatory Contributions
Mandatory contributions to the German pension system are the norm for most employed individuals. Both the employee and the employer contribute a portion of the employee's income to these mandatory payments. The contributions are contingent upon earnings up to a certain ceiling (€66,150 per year as of 2025), and they serve to fund the statutory pension insurance system.
Optional Contributions
Optional contributions, on the other hand, give individuals a chance to enhance their pension benefits beyond the mandatory requirements. These optional contributions are often made by self-employed individuals, freelancers, or employees who earn above the contribution assessment ceiling.
Equal Treatment - A Debatable Point
The difference in treatment between voluntary and compulsory contributions has been a matter of debate. Critics argue that a basic pension supplement should be given to those who have made voluntary contributions as well, as they have contributed significantly to the financing of the statutory pension insurance system.
However, the Federal Social Court (BSG) in Kassel recently made history by ruling that periods with voluntary contributions do not count towards the basic pension periods. This decision was based on the observation that compulsory contributions and voluntary contributions have significant differences in the statutory pension insurance. Unlike compulsorily insured persons, the amount of contributions for voluntarily insured persons does not depend on their underlying insured employment.
The BSG argued that it is fundamental for the legislator to treat compulsorily insured and voluntarily insured persons differently in the statutory pension insurance. The legislator has a wide scope of discretion in this matter, particularly for benefits provided from federal funds for social equalization, such as the basic pension supplement.
Currently, around 1.27 million recipients enjoy the benefits of the basic pension supplement in Germany, with an average increase of 92 euros per pension at the end of 2023.
In essence, the unequal treatment between voluntary and compulsory contributions in Germany is justified due to the structure of the pension system, the role of voluntary contributions, and the broader economic and social policy objectives in the country.
- The debate over the differences in treatment between voluntary and compulsory contributions in Germany's pension system centers around the idea that those who make voluntary contributions, such as self-employed individuals and freelancers, should receive a basic pension supplement, considering their significant contribution to the financing of the statutory pension insurance system.
- The recent ruling by the Federal Social Court (BSG) in Kassel further emphasized the unequal treatment between voluntary and compulsory contributions, stating that periods with voluntary contributions do not count towards the basic pension periods due to the fundamental differences in the statutory pension insurance, where the amount of contributions for voluntarily insured individuals is not dependent on their underlying insured employment.
