The employer and the employee both pay into an earnings-related pension for the employee. The employer automatically withholds the employee’s share of the contribution from their wages and posts the total contribution to the pension provider.
Every year, the Ministry of Social Affairs and Health sets the pension insurance contribution for that year. Both wage earners and employers have the right to deduct the pension contributions they have paid in their own taxation.
All private sector employees (apart from seafarers) are insured under the Employees Pensions Act.
Employee’s contribution rate in 2024 is 7.15% for under 53 and over 62 year-old employees and 8.65% for employees between 53 and 62 years old.
|Under 53 and over 62
|Between 53 and 62
The final contribution rate of the employer may vary by several percentage points depending on the employer.
Employer with an insurance contract
An employer who constantly employs people or whose wage bill for a six-month period reaches a certain limit set each year (€9,822 in 2024) is an employer with an insurance contract.
An employer with an insurance contract arranges its employees’ pensions with a separate pension insurance.
The grounds for the contribution of an employer with an insurance contract depends on the total wage bill of the employer. As a rule, an employer with an insurance contract whose total wage bill two years ago (in 2022) is less than €2,252 billion per year pays contributions to a fixed rate of 25.12% (in 2024; including the employee’s share of the contribution).
If the wage sum of the insured employees is more than €2,252 billion per year, the employer’s contribution rate is affected by the premium category. A customer bonus that is company-specific and based on the customer relationship, may also reduce the contribution of an employer with an insurance contract.
An employer who does not constantly employ people and whose wage bill for a six-month period is below a certain limit set each year (€9,822 in 2024) is an occasional employer.
An occasional employer does not have to sign an insurance contract. Instead, they pay the insurance contributions to a pension insurance company of their choice.
An occasional employer pays a fixed contribution under the Employees Pensions Act. In 2024, the contribution of an occasional employer is 26.12% (including the employee’s share of the contribution).