Contribution exemption

What it means

A contribution exemption lets certain workers on agreements pay no pension insurance on income up to a monthly threshold set by law. It applies to students on a student work agreement and to recipients of an old-age or disability pension working on agreements.

The exemption can be applied to one agreement with one employer in a given month only. The worker must designate it in writing and notify the employer. If they have several agreements, full contributions are paid on the others.

If income exceeds the threshold, contributions are paid only on the part above it. The exemption concerns pension insurance; other insurance, such as accident insurance, is still paid by the employer, and health insurance follows its own rules.

How it works in practice

When a student or pensioner starts on an agreement, we ask for a written statement of whether they are claiming the exemption with us and remind them it can apply to only one agreement. The statement is filed in their personnel file.

The exemption is reported separately in the monthly contribution statement. The Social Insurance Agency compares data from all employers, and if more than one applies the exemption at the same time, both receive queries and back-payment demands.

When budgeting for student and pensioner workers, the exemption is a substantial saving for both worker and employer. It is worth remembering, though, that with higher earnings the part above the threshold attracts contributions.

What to watch out for

The most common mistake is the exemption being claimed with two employers at once because the student or pensioner did not know the rule. The Social Insurance Agency then cancels it with both, and the employers pay the contributions with a penalty.

The second risk is a missing written designation. Without it the exemption must not be applied, and at a contributions audit the company pays all the contributions retrospectively, even for months when the agreement was entirely in order.