Maximum assessment base

What it means

The maximum assessment base is the ceiling above which income carries no further social insurance. It is set as a multiple of the average monthly wage in the economy two years back, so it moves every year without any amendment.

The ceiling covers sickness, pension and unemployment insurance and the reserve fund, but not the employer’s accident insurance. Health insurance on wages has no ceiling at all, however often the opposite is repeated.

The opposite of the ceiling is the minimum assessment base, on which a self-employed person pays contributions even when income is lower. The ceiling caps contributions from above, the minimum from below, and in between contributions are worked out on the actual base. For an employee on a wage the minimum does not apply in this form, the ceiling does.

How it works in practice

The ceiling applies monthly and separately in each insurance relationship. Someone with two employers reaches it with each of them and pays more in total; social insurance has no annual reconciliation, so the excess is not refunded.

Benefits carry a ceiling of their own: the daily assessment base behind sickness and maternity benefit is capped separately and sits well below the ceiling on contributions. A high earner therefore pays levies on the capped amount, draws benefit off a lower figure still, and only the pension is worked out from the base actually paid on.

When an annual bonus is paid in one go, the ceiling is easily reached that month and part of the bonus carries no social insurance. When bonus payments are being planned, we show the client how the employer cost differs between a single payment and payments spread over several months, and leave the decision to them.

What to watch out for

Payroll software set up for another country breaks the ceiling in two ways: it applies it cumulatively across the year instead of month by month, or it extends it to health insurance as well. The second error surfaces in the annual reconciliation, and the insurer assesses the arrears with interest.

The ceiling changes from January, and payroll software often picks it up only with an update. If January pay is processed with the old figure, contributions for high earners are calculated on the wrong amount, and the difference has to be corrected in the monthly report to the Social Insurance Agency and on the payslip.