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$Unique_ID{COW01411}
$Pretitle{373B}
$Title{Unified Germany
Chapter 4. Provisions Concerning the Social Union}
$Subtitle{}
$Author{Press and Information Office}
$Affiliation{German Embassy, Washington DC}
$Subject{insurance
republic
german
pension
democratic
germany
federal
fund
health
article}
$Date{1990}
$Log{}
Country: Unified Germany
Book: The Unity of Germany and Peace in Europe
Author: Press and Information Office
Affiliation: German Embassy, Washington DC
Date: 1990
Chapter 4. Provisions Concerning the Social Union
ARTICLE 17__________
Principles of Labour Law
In the German Democratic Republic freedom of association, autonomy in
collective bargaining, legislation relating to industrial action, corporate
legal structure, codetermination at board level and protection against
dismissal shall apply in line with the law of the Federal Republic of Germany;
further details are contained in the Protocol on Guidelines and in Annexes II
and III.
ARTICLE 18__________
Principles of Social Insurance
(1) The German Democratic Republic shall introduce a structured system of
social insurance, to be governed by the following principles:
1. Pension, sickness, accident and unemployment insurance shall each be
administered by self-governing bodies under public law subject to legal
supervision by the state.
2. Pension, sickness, accident and unemployment insurance including
employment promotion shall be financed primarily by contributions.
Contributions to pension, sickness and unemployment insurance shall, as a
rule, be paid half by the employee and half by the employer in line with the
contribution rates applicable in the Federal Republic of Germany, and accident
insurance contributions shall be borne by the employer.
3. Wage replacement benefits shall be based on the level of insured
earnings.
(2) Initially, pension, sickness and accident insurance shall be
administered by a single institution; income and expenditure shall be
accounted for separately according to the type of insurance. Separate pension,
sickness and accident insurance institutions shall be established, if possible
by 1 January 1991. The aim shall be to create an organizational structure for
social insurance which corresponds to that of the Federal Republic of Germany.
(3) For a transitional period the present comprehensive compulsory social
insurance cover in the German Democratic Republic may be retained. Exemption
from compulsory social insurance cover shall be granted to self-employed
persons and professionals who can prove that they have adequate alternative
insurance. In this connection, the creation of professional pension schemes
outside the pension insurance system shall be made possible.
(4) Wage-earners whose earnings in the last wage accounting period before
1 July 1990 were subject to a special tax rate under Section 10 of the
Ordinance of 22 December 1952 on the Taxation of Earned Income (Law Gazette
No. 182, p. 1413) shall receive until 31 December 1990 a supplement to their
pension insurance contribution amounting to
- DM 30 for monthly wages up to DM 600,
- DM 20 for monthly wages of more than DM 600 up to DM 700, and
- DM 10 for monthly wages of more than DM 700 up to DM 800.
Earnings from several employments shall be counted together. The
supplement shall be paid to the wage-earner by the employer. Upon application
the employer shall be reimbursed for these payments from the budget.
(5) The ceilings for compulsory insurance cover and for contribution
assessment shall be fixed according to the principles of social insurance law
applying in the Federal Republic of Germany.
ARTICLE 19__________
Unemployment Insurance and Employment Promotion
The German Democratic Republic shall introduce a system of unemployment
insurance including employment promotion which shall be in line with the
provisions of the Employment Promotion Act of the Federal Republic of Germany.
Special importance shall be attached to an active labour market policy, such
as vocational training and retraining. Consideration shall be given to the
interests of women and disabled persons. In the transitional phase, special
conditions in the German Democratic Republic shall be taken into account. The
Governments of both Contracting Parties shall cooperate closely in the
development of unemployment insurance including employment promotion.
ARTICLE 20__________
Pension Insurance
(1) The German Democratic Republic shall introduce all necessary measures
to adapt its pension law to the pension insurance law of the Federal Republic
of Germany, which is based on the principle of wage and contribution-related
benefits. Over a transitional period of five years account shall be taken of
the principle of bona fide rights protection in respect of persons approaching
pensionable age.
(2) The pension insurance fund shall use its resources exclusively to
meet its obligations with regard to rehabilitation, invalidity, old age, and
death. The existing supplementary and special pensions schemes shall be
discontinued as of 1 July 1990. Accrued, claims and entitlements shall be
transferred to the pension insurance fund, and benefits on the basis of
special arrangements shall be reviewed with a view to abolishing unjustified
benefits and reducing excessive benefits. The additional expenditure incurred
by the pension insurance fund because of such transfers shall be reimbursed
from the budget.
(3) Upon conversion to Deutsche Mark current pensions from the pension
insurance fund shall be fixed at a net replacement rate which, for a
pensioner who has completed 45 insurance/working years and whose earnings were
at all times in line with average earnings, shall be 70 per cent of average
net earnings in the German Democratic Republic. For a greater or smaller
number of insurance/working years, the percentage shall be correspondingly
higher or lower. The basis for calculating the upgrading rate for individual
pensions shall be the pension of an average wage-earner in the German
Democratic Republic, graduated according to year of entry, who has paid full
contributions to the voluntary supplementary insurance scheme of the German
Democratic Republic, over and above his compulsory social insurance
contributions. If there is no upgrading on this basis a pension shall be paid
in Deutsche Mark which corresponds to the amount of the former pension in
Mark of the German Democratic Republic. Survivors' pensions shall be
calculated on the basis of the pension which the deceased would have received
after conversion.
(4) Pensions from the pension insurance fund shall be adjusted in line
with the development of net wages and salaries in the German Democratic
Republic.
(5) The voluntary supplementary pension insurance scheme in the German
Democratic Republic shall be discontinued.
(6) The German Democratic Republic shall make a government contribution
to its pension insurance fund to offset its expenditure.
(7) Persons who have transferred their habitual residence from the
territory of either Contracting Party to that of the other Party after 18 May
1990 shall receive from the pension insurance institution hitherto responsible
a pension calculated according to the regulations applicable to that
institution for the period completed there.
ARTICLE 21__________
Health Insurance
(1) The German Democratic Republic shall introduce all necessary measures
to adapt its health insurance law to that of the Federal Republic of Germany.
(2) Benefits which have hitherto been financed from the health insurance
fund according to the legislation of the German Democratic Republic but which
according to the legislation of the Federal Republic of Germany are not
benefits covered by the health insurance fund shall, for the time being, be
financed from the budget of the German Democratic Republic.
(3) The German Demo