Servus #23

December 2024

Table of Contents

• Simplifications in the Evidence Act
• Significant increase in income thresholds for social security contributions in 2025
• Pension Protection Association’s contribution rate for 2025
• Impact of the coalition’s end on occupational pensions, statutory pensions, and private retirement provision
• 2024 Health Report by Techniker Krankenkasse: Key findings and recommendations for employers
• News from Profion

Simplifications to the Evidence Act Under the Fourth Bureaucracy Relief Act

As of January 1, 2025, compliance with the formal requirements of the Nachweisgesetz (NachwG) will become easier. Key information about working conditions will no longer need to be handed to employees in written form alone but can instead be provided in text form and transmitted electronically. Previously, electronic documentation was explicitly excluded, meaning not only electronically signed employment contracts failed to meet formal requirements, but also extensive information on occupational pensions had to be provided in paper form.

This change comes after the legislator had tightened the requirements of the NachwG on August 1, 2022, creating a significant hurdle for digitization by introducing a strict written form requirement—even though the underlying EU directive had allowed for electronic documentation.

The newly permissible electronic transmission brings significant simplifications but is subject to three conditions: First, the document must be accessible to the employee. Second, it must be printable and storable. Third, the employer must request an acknowledgment of receipt from the employee upon transmission. Additionally, the information must be sent individually to each employee, meaning a general announcement to the workforce will not suffice.

Significant Increase in Contribution Assessment Thresholds Starting January 1, 2025

Also, as of January 1st, the contribution assessment limits in social insurance will be raised. This increase is particularly high this time. The contribution assessment limit for general pension and unemployment insurance will rise from €90,600 (or €89,400 in the East) to €96,600, an increase of over 6.6% (or 8% in the East). For 2025, a uniform value will apply for both East and West for the first time.

In health and long-term care insurance, the contribution assessment limit will increase from €62,100 to €66,150, also a significant increase of 6.5%. The compulsory insurance limit, which is decisive for the option to switch to private health insurance, will rise by a similar amount from €69,300 to €73,800.

The reason for this increase is the rising wages and salaries. The calculated wage growth rate in 2023 was 6.44%, up from 4.13% in 2022. Overall, this will lead to a higher burden on both employees and employers, particularly in higher-paying jobs. An additional burden is likely to arise in February, as a 0.2% increase in the contribution rate for long-term care insurance is expected, along with increases in supplementary contributions from health insurers, which are also expected at the beginning of the year.

Pension Protection Association’s (PSV) Contribution Rate for 2025

The Pension Protection Association (PSV) set the contribution rate for the upcoming year on November 12. According to this, the rate for 2025 will be 0.4 per thousand, which is lower than both the previous year’s rate of 1.9 per thousand and the long-term average of 2.7 per thousand. The unusually low rate is due to the fact that while the number of claims in the second half of the year has slightly increased, the claims volume has developed more favorably than expected. The relatively low contribution rate is also due to the favorable capital market environment and a significant relieving effect from the reversal of last year’s provision for contribution refunds (the pension obligations assumed by the PSV are reinsured by an insurance consortium). According to the PSV, this special effect amounted to 1.6 per thousand. Without it, the contribution rate would have been 2.0 per thousand, slightly above the previous year’s rate.

Impact of the coalition’s end on occupational pensions, statutory pensions, and private retirement provision

As of January 1, 2025, compliance with the formal requirements of the Nachweisgesetz (NachwG) will become easier. Key information about working conditions will no longer need to be handed to employees in written form alone but can instead be provided in text form and transmitted electronically. Previously, electronic documentation was explicitly excluded, meaning not only electronically signed employment contracts failed to meet formal requirements, but also extensive information on occupational pensions had to be provided in paper form.

This change comes after the legislator had tightened the requirements of the NachwG on August 1, 2022, creating a significant hurdle for digitization by introducing a strict written form requirement—even though the underlying EU directive had allowed for electronic documentation.

The newly permissible electronic transmission brings significant simplifications but is subject to three conditions: First, the document must be accessible to the employee. Second, it must be printable and storable. Third, the employer must request an acknowledgment of receipt from the employee upon transmission. Additionally, the information must be sent individually to each employee, meaning a general announcement to the workforce will not suffice.

The plans to reform private pension schemes are also to be considered a failure. The corresponding draft law proposed the introduction of a subsidized pension savings account. The basic funding system known from the Riester pension would have remained in place: tax-free contributions during the accumulation phase, deferred taxation during the payout phase, subsidies through contribution-proportional basic and child allowances, as well as special deductions and increased amounts for low earners and career starters. The key innovation would have been that even fund investments without guarantees would have been eligible for funding, allowing for higher returns, as well as the removal of the requirement for mandatory lifetime annuitization. The GDV, as the insurer association, and the BVI, as the association of asset management companies, particularly disagreed on the latter issue. This dispute is now, for the time being, irrelevant.

Conclusion: The end of the government coalition has increased the reform backlog in the area of urgently needed pension reforms. The need for well-funded occupational security systems is therefore greater – and from the perspective of employees – more important than ever when choosing an employer.

Techniker Krankenkasse Health Report 2024: Key Insights for Employers

The Techniker Krankenkasse (TK), Germany’s largest statutory health insurance provider with over 11.7 million members, publishes an extensive annual health report¹. This report provides valuable insights into the health and work capacity of employees in Germany.

Focus on Work Incapacity
In 2023, data on work incapacity from 5.7 million socially insured employees and unemployed TK members were analyzed.

The results show:

• Increase in Absenteeism: 10.02 million reported cases of work incapacity led to a total of 114.93 million missed workdays.
• Average Absence: Each employee was sick for an average of 19.4 days in 2023 (2022: 19.0 days).
• Sick Leave Rate: The adjusted sick leave rate increased slightly from 5.20% (2022) to 5.31% (2023).

Main Reasons for Absences
The analyzed cases of illness can be divided into four categories:

1. Respiratory diseases (e.g., colds, flu): Particularly affecting women.
2. Psychological disorders (e.g., depression, burnout): Also more common in women.
3. Musculoskeletal disorders (e.g., back pain): Predominantly affecting men.
4. Injuries (e.g., accidents): Also more frequent in men.

Interesting: Although the number of reported work incapacity cases has increased, the average duration per illness has decreased.

Tips for Employers
How can you, as an employer, use these findings in your company?

1) Identify Data-Driven Health Trends
Analyzing health data provides valuable insights into employee health trends. In Germany, however, collecting data on the causes of illness is particularly challenging due to legal and data protection regulations:

• Data Protection Requirements: In Germany, companies are not allowed access to employees’ medical diagnoses. Absenteeism data must be anonymized and aggregated for analysis.
• Solution Approach: Focus on meaningful KPIs such as the number and duration of absences per department or location. These provide insight into potential stressors without requiring the collection of sensitive data.
• Regular Reporting: Create reports on absenteeism, trends, and changes. These should remain anonymized to comply with data protection laws and strengthen employee trust.

With these insights, you can derive measures such as prevention programs or flexible working models tailored to specific needs.

2) Investments in Wellbeing and Prevention
Health-oriented benefits such as flexible working hours, ergonomic workstations, or psychological counseling services strengthen the resilience of the workforce. Programs like “Employee Assistance Services” can be particularly helpful in addressing mental health challenges, which are also prominently highlighted in the TK report.

3) Use of Modern Tools for Efficiency and Data Protection: The Electronic Sick Leave Certificate (eAU)
In Germany, the electronic sick leave certificate (eAU) has been introduced as a modern system to replace traditional paper-based sick leave notifications.

How the eAU works:

• When an employee is on sick leave, the doctor sends the sick note electronically to the relevant health insurance provider.
• The health insurance provider then informs the employer, also digitally, about the duration of the work incapacity – without details on the diagnosis.
• Employees no longer need to submit sick notes in person, saving time and reducing the potential for errors.

Advantages for Employers:

• Real-time communication: Sick notes reach the employer faster, making personnel planning easier.
• Data protection compliance: Only the duration of the work incapacity is transmitted, and diagnoses remain anonymous.
• Efficiency improvement: Paper-based processes are eliminated, and HR departments can manage sick leave digitally.

4) Increase Employer Attractiveness
In times of skill shortages, a health-promoting corporate culture not only enhances employee satisfaction but also makes you more attractive to potential talent.

Conclusion
The insights from the TK Health Report show how important strategic health management is. With regular analyses, innovative tools like the eAU, and health-promoting programs, you can ensure the long-term health and productivity of your teams—while strengthening data protection and employee trust.

¹Techniker Krankenkasse. (2024). TK-Gesundheitsreport 2024: Arbeitsunfähigkeiten und Arzneimittelverordnungen. Hamburg: Techniker Krankenkasse. Retrieved from [gesundheitsreport-au-2024-data.pdf].

In Our Own News: Profion’s Growth and Outlook

Gegen Ende dieses ereignisreichen Jahres geben wir Ihnen einen kurzen Rück- und Ausblick auf die weiterhin sehr positive Geschäftsentwicklung von Profion.

Profion continues to expand:

• 50+ employees from over 10 nations across two locations (Munich, Frankfurt)
• 6 memberships in international broker networks
• 650+ clients
• 80,000+ beneficiaries
• 250+ million euros in assets under management

2024 highlights:

• Expansion of our product portfolio to include additional insured benefits, such as company health insurance
• Enhancement of our advisory services with a risk management approach
• Expansion of our portfolio of fringe benefits (non-insured benefits) and HR Services
• Establishment of additional national and international business relationships, e.g., through membership in the German Japanese Business Association or a partnership with the ETL Group
• Achievement of further milestones in automated administration, such as the launch of an employee portal and the implementation of a CRM program

Goals for 2025:

• Hire at least five new employees.
• Enhance digital workflows.
• Improve product offerings with higher risk benefits and performance-oriented reinsurance options.

If you have any questions or ideas on how we can further expand or improve our services for you, please feel free to reach out to us. One of our core values is being service- and client-focused – a principle we have embodied for over 25 years.

We thank you for your trust and collaboration in 2024 and wish you a joyful holiday season and a prosperous 2025!

Michael Stache (CSO) & Mathias Thiel (COO)

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