Social insurance – who, how much and where

What social security contributions are for

Social insurance, or social security contributions, consists of three components – sickness insurance, pension insurance and contributions to state employment policy. It is therefore the amount you pay to create decent living conditions for yourself and your fellow citizens, especially in adverse social situations. The most common are pensioners, the unemployed or sick people.

The largest part of social security money goes on old-age pensions and health care, which together account for about ¾ of total spending. But in addition, money also goes on family benefits, disability pensions, survivors’ benefits (orphans’, widows’, etc.), unemployment benefits, social exclusion and housing allowances.

Do I have to pay social security? And to where?

Employers, employees, self-employed persons, foreign employees and persons voluntarily participating in pension insurance must pay social insurance.

Social insurance and employers

As an employer, you are obliged to pay social insurance on behalf of your employees, which you deduct from their wages.

Social insurance and employees

Your employer pays social security for you as an employee, so you don’t have to worry about anything. The advantage for you is that even if your employer doesn’t pay the insurance for you, you won’t have any problems. You won’t face any penalties and you will still be entitled to all the benefits that come with paying National Insurance. The consequences will only be borne by your employer. It is also important to note that your employer pays your social security even if you work part-time. Similarly, you do not have to deal with social security when you take unpaid leave.

Social insurance and the self-employed

As a self-employed person, you pay social insurance yourself directly to the district social security office or, in the case of a lump sum, to the tax office. However, only pension insurance is compulsory; sickness insurance is voluntary. In the case of secondary activities, payment of pension insurance is only compulsory on the basis of income – in 2024 the minimum threshold is set at CZK 105,520.

Payment is made monthly in the form of advances and the following year you are obliged to submit a statement of income and expenses, which determines the amount of the insurance premium for the previous year and the refund of overpayments or underpayments.

Social insurance and self-payment

Citizens can also participate in pension insurance on a voluntary basis. Most often, these are people registered with the labour office as jobseekers, students or people working abroad.

Who does not have to pay social insurance?

People with no taxable income do not have to pay social insurance. This includes, for example, students, pensioners, people working on contracts and people registered as jobseekers with the employment office.

Amount of social insurance

Employer and employee

Social insurance is the product of the assessment base and the percentage rate. The employer’s assessment base is the sum of all the assessment bases of his employees. For an employer, this is 24.8% of the assessment base. Of this, 2.1 % is for sickness insurance, 21.5 % for pension insurance and 1.2 % for state employment policy.

For the employee, it is 7.1% of the assessment base. The employee’s assessment base is the sum of his/her taxable income from employment. It is therefore not included in the assessment base:

• compensation for damages;
• severance pay and other severance, redundancy or termination payments and remuneration on termination of office;
• miners’ loyalty allowance;
• benefits provided to a recipient of an old-age pension or a third degree invalidity pension after the expiry of one year from the date of cessation of employment;
• a one-off social allowance granted to an employee to help him or her to overcome exceptional hardship resulting from a natural disaster, fire, environmental or industrial accident or other exceptional occurrence.

In addition, however, a maximum assessment base is laid down. This is 48 times the average wage and amounts to CZK 2 110 416 in 2024. It is calculated as the sum of all the employee’s assessment bases for one calendar year. If this sum exceeds the maximum assessment base, the employee does not pay social insurance on the excess. However, this applies only if the employee was employed by only one employer. This also applies to the employer himself, who also does not pay social security on this amount, either for himself or for the employee.

SELF-EMPLOYED

For the first year of your self-employed secondary activity, you are not obliged to pay advance payments of insurance premiums. In the case of your main activity, you then pay advances based on the minimum assessment base – which is set at CZK 131,904 for 2024. In subsequent years, the advance payments are determined on the basis of your income and expenditure statements. You must submit this statement within one month of the deadline for filing your tax return. However, if you are in the flat-rate scheme, you do not have to submit an income and expenditure statement.

The assessment base is determined as half of one-twelfth of the total profit (the difference between income and expenditure) and the insurance is determined as 29.2% of the assessment base. Of this, 28% goes to pension insurance and 1.2% goes to state employment policy.

The Self-Publisher

Even for self-payers, the amount of social insurance is calculated as a percentage of the assessment base. However, the amount of the assessment base in this case is up to the payer. However, it must not be less than ¼ of the average wage for the year. The rate of contribution on the assessment base is then set at 28 % for a person who voluntarily participates in a pension scheme.

Where to pay? – Social Security Administration

Advances for social insurance are paid to the Czech Social Security Administration(ČSSZ), specifically to the account of the relevant territorial social security administration, between the 1st and 20th day of the following calendar month.

In addition to collecting social insurance, the Czech Social Security Administration has a number of other important functions. Let us look at these functions and the way it is organised in more detail:

What does the Czech Social Security Administration do?

The main task of the Czech Social Security Agency is the administration of pension and sickness insurance, including the collection of social security contributions and contributions to state employment policy. Its activities therefore include:

• Collecting social security premiums and contributions to state employment policy: the CSSA regularly collects insurance premiums from employers, self-employed persons (self-employed persons) and other payers. It also checks the correctness of the calculation and payment of these payments.
• Deciding on pension benefits and their payment: the CSSA decides on entitlement to all types of pensions (old-age, invalidity, widow’s, widower’s, orphan’s). After the decision, it ensures their regular payment to the beneficiaries to their bank accounts or via the Czech Post.
• Deciding on the return of pensions paid out in error: in cases where a pension recipient has received benefits illegally (e.g. by providing false information or by a change in situation of which the CSSA was not informed), the CSSA decides on the obligation to return the pension paid out. If the error in the payment of the pension was due to the fault of the organisation (e.g. the employer who provided incorrect documents), the CSSA decides on its liability and the reimbursement of these amounts.
• Appeals: the CSSA acts as an appeals body in cases decided in the first instance by district social security administrations (OSSZ). This includes, for example, situations where citizens disagree with a decision of the Social Security Office to refuse a pension or sickness benefit.
• Removing hardship: If the legal procedures for deciding on social security matters lead to unreasonably harsh consequences, the CSSA may decide to mitigate these consequences (removal of hardship).
• Court proceedings: the CSSA represents the State in proceedings to review social security decisions that come before the courts.
• Managing and controlling the activities of district social security administrations: the ČSSZ coordinates the activities of the OSSZ, PSSZ (Prague) and MSSZ (Brno), including control of their administrative procedures, methodological procedures and the correctness of the collection of insurance premiums and payment of benefits.

Organisational structure of the ČSSZ

The superior body of the ČSSZ is the Ministry of Labour and Social Affairs. The Czech Social Security Administration is headed by a director.

In each district town there are district social security administrations (OSSZ) which provide direct services to citizens. In Brno there is the Municipal Social Security Administration and in Prague the Prague Social Security Administration. In addition, the Institute of Health Assessment, which is based in Hradec Králové, is also part of the ČSSZ.

Summary

Social insurance forms the basis of social security in the Czech Republic. It is compulsory for employers, employees, self-employed persons and certain other groups, and the amount of the insurance premium is based on income or the assessment base.

The largest share of social insurance funds goes to pensions and health care, but it also finances other social benefits such as unemployment benefits and housing allowances.