Investment & Wealth
Occupational pension scheme
entitlement to capital-forming benefits
Entitlement to Capital-Forming Benefits: Your Path to State-Supported Wealth Building
Many employees in Germany are entitled to capital-forming benefits, but often don't know how to make the most of them. Learn how you can create a significant financial cushion with up to 40 euros monthly from your employer and attractive government subsidies.
The topic in brief and concise terms
Almost every employee is entitled to capital-forming benefits (VL) from their employer of up to 40 euros per month.
State subsidies such as the employee savings allowance (up to 80 euros) and the housing construction premium (up to 70 euros) significantly increase the return.
The income limits for the employee savings allowance were increased to 40,000 euros (single) and 80,000 euros (married) in 2024. [3,5§13]
Quick Facts on Eligibility for Capital-Forming Benefits – The Essentials at a Glance
Employee savings schemes (VL) are financial contributions from your employer that help you build wealth. The amount is often up to 40 euros per month, or 480 euros per year. Almost every employee, trainee, civil servant, judge, and soldier can be entitled to employee savings schemes. To receive VL, you need to enter into a VL-eligible savings contract and inform your employer about it. The state also supports VL savings with the employee savings allowance and, under certain circumstances, with the building society savings bonus. These subsidies can increase your savings performance by several percentage points. The exact conditions for entitlement to employee savings schemes are often found in the collective agreement, company agreement, or your employment contract. Take advantage of this opportunity to actively shape your financial future, for example with a company pension scheme. Knowing these basics is the first step to your additional wealth.
Your path to VL – Requirements and application in practice
Check Eligibility: Who is entitled to the benefit?
Whether you are entitled to employee savings benefits depends on various factors. In many sectors, the entitlement is stipulated in collective agreements; however, it can also arise from a works agreement or directly from your employment contract. Employers can also voluntarily pay employee savings benefits, even if there is no legal obligation. Part-time employees often receive these benefits on a pro-rata basis, corresponding to their working hours. Therefore, it's worthwhile to enquire with your employer or HR department whether and to what extent you are entitled to employee savings benefits. As a rule, the entitlement begins after six months of employment.
Selecting a Savings Plan: What investment options are available?
If you are entitled to employee savings benefits, you can choose from various investment options. The most common are:
Building savings contracts: Ideal for future property owners, as they are often supported by employee savings bonuses and home ownership subsidy. They offer fixed interest rates for the savings and loan account.
Fund savings plans (e.g. equity funds, ETFs): Offer higher return opportunities, but are also associated with higher risks. They are supported by employee savings bonuses.
Bank savings plans: A secure, but often less profitable option, which is generally not state-supported.
Repayment of a construction loan: Existing property loans can be repaid more quickly with employee savings benefits, for which there is also an employee savings bonus.
Company pension scheme: Employee savings benefits can also flow into certain forms of company pension schemes.
The choice of the right investment option depends on your risk tolerance and savings goals. A private pension insurance can be another pillar of your financial planning.
Step-by-Step Guide to Applying
Applying for employee savings benefits is straightforward. Just follow these five steps:
Ask your employer or HR department whether and to what extent you are entitled to employee savings benefits.
Inform yourself about the various investment options and choose the one that suits you best.
Conclude a savings contract eligible for employee savings benefits with a provider of your choice.
Submit a copy of the savings contract to your employer.
Your employer will then transfer the amounts directly into your contract.
In this way, you can simply and effectively secure additional benefits. The next section shows how to make optimal use of government subsidies.
Make the most of government subsidies – Get more out of your VL
The Employee Savings Bonus: Up to 80 Euros Extra from the Government
The Employee Savings Bonus is a government incentive for your entitlement to capital-forming benefits. As of 1 January 2024, new, higher income limits apply: for single individuals, the threshold is a taxable annual income of 40,000 Euros, and for married couples, it’s 80,000 Euros. [3,5§13] The amount of the bonus depends on the type of investment: for investment funds, there is a twenty percent bonus on deposits up to 400 Euros annually (maximum bonus 80 Euros). For home savings contracts or the repayment of a housing loan, it is nine percent on up to 470 Euros (maximum bonus 43 Euros). As an example: if you pay 400 Euros into an investment fund annually, you receive an 80 Euro bonus.
Home Ownership Savings Bonus: Additional 70 Euros for Home Savers
If you invest your capital-forming benefits in a home savings contract, you can receive the Home Ownership Savings Bonus in addition to the Employee Savings Bonus. This scheme has its own income limits: 35,000 Euros for single individuals and 70,000 Euros for married couples. The bonus amounts to ten percent on annual payments of up to 700 Euros (for singles) or 1,400 Euros (for married couples). This means a maximum annual bonus of 70 Euros or 140 Euros. It is important that you also contribute your own funds towards the Home Ownership Savings Bonus, which must exceed the basic capital-forming payments, provided the capital-forming payments are already used for the Employee Savings Bonus. This bonus serves as an additional incentive to consider a whole life insurance policy or other savings forms.
Top-Up is Worth It: Personal Contributions for Maximum Benefits
If your employer contributes less than the maximum eligible amount for capital-forming benefits, you can top up the difference yourself. This is particularly sensible to maximise the full government incentive. For example, if your employer provides only 20 Euros monthly (240 Euros annually) towards an investment fund, you could personally add an extra 13.33 Euros monthly (160 Euros annually) to reach the eligible amount of 400 Euros and secure the maximum Employee Savings Bonus of 80 Euros. This flexibility makes the entitlement to capital-forming benefits a valuable tool for your investment strategy. With these optimisations in mind, let’s now take a look at the legal details.
Expert Knowledge on Employee Savings Schemes – Legal Foundations and Special Cases
The Fifth Wealth Creation Act (5. VermBG) as a Basis
The legal foundation for the entitlement to asset-forming benefits is provided by the Fifth Wealth Creation Act (5. VermBG). This law details who is eligible (§1), which investment forms are permitted (§2), and under what conditions the employee savings bonus is granted (§13). It also includes the option to invest parts of your own salary in an asset-forming manner (§11) and the free choice of investment form (§12). Knowledge of these paragraphs helps to fully exploit your own rights and opportunities. The law was last amended on 2nd December 2024, with adjustments to the income limits in §13 becoming relevant for VL as of 1st January 2024.
VL for Specific Groups: Trainees, Part-Time Employees, Public Sector
The entitlement to asset-forming benefits and their amount can vary for certain groups of people:
Trainees: Often have a collectively agreed entitlement, for example, 13.29 euros per month. They can also receive state subsidies.
Part-Time Employees: Usually receive VL proportionally to their working hours. Augmenting with personal contributions is often particularly sensible here.
Employees in the Public Sector: Here, collective agreements (e.g., TVöD, TV-L) or specific laws (for civil servants, judges, soldiers) govern the entitlement. The amounts are often 6.65 euros monthly. For employees under the collective agreement of the savings banks, it can also be 40 euros.
It is advisable to thoroughly examine the specific regulations for your professional group. The 3 layers of pension provision offer a good framework to categorize VL.
Contract Duration, Termination, and Employer Change
VL contracts typically have a term of seven years. This usually consists of six years of payment phase followed by a rest year (blocking period). After this period, you can generally dispose of the accumulated assets freely. Early termination is possible, but often results in the loss of state subsidies and may incur fees. However, there are exceptions, such as marriage or prolonged unemployment, where termination without losing benefits is possible. If you change employers, your VL contract remains; you should clarify with your new employer whether they will continue payments. A direct insurance can also be affected by such regulations. These aspects are important for long-term planning.
Our expert tip: Review your VL contracts and your income situation at least every two years. Adjust your strategy if necessary to always obtain the optimal support and achieve your savings goals. Switching the investment form or adjusting personal contributions may be advisable if your life circumstances change.
More useful links
The Federal Ministry of Finance offers a letter on the application of the fifth Assets Building Act (VermBG).
On Laws at Internet, you will find the Law on Asset Building for Employees (Asset Building Act).
The Consumer Advice Centre provides comprehensive information on employee savings schemes.
A press release from the Federal Statistical Office (Destatis) provides current data.
The Bundesbank publishes a study on wealth in Germany.
Wikipedia offers a comprehensive article on employee savings schemes.
The Federal Agency for Civic Education (bpb) provides a glossary entry on employee savings schemes.
Another law on the asset building of savings contributions, the Federal Building Allowance Act, is available on Laws at Internet.
The Federal Ministry of Finance offers a glossary entry on employee savings schemes.
FAQ
Muss mein Arbeitgeber vermögenswirksame Leistungen zahlen?
Einen generellen gesetzlichen Anspruch gibt es nicht immer. Die Zahlungspflicht ergibt sich oft aus Tarifverträgen, Betriebsvereinbarungen oder dem Arbeitsvertrag. Manche Arbeitgeber zahlen VL auch freiwillig.
Sind vermögenswirksame Leistungen steuerpflichtig?
Yes, capital-forming benefits are part of the salary and therefore subject to income tax and social insurance contributions. However, government allowances are tax-free.
Was passiert mit meinen VL bei einem Arbeitgeberwechsel?
Your VL contract is under your name and remains valid even if you change employers. You should clarify with your new employer whether they will continue payments into the existing contract.
Kann ich meinen VL-Vertrag vorzeitig kündigen?
Early termination is usually possible, but it typically results in the loss of the government's employee savings allowance and may incur costs. There are exceptional cases (e.g., marriage, unemployment) where a termination without detriment to the allowance is possible.
Welche Anlageform ist die beste für meine VL?
The best investment form depends on your individual goals and risk tolerance. Building savings contracts are suitable for property plans, while fund savings plans offer higher yield opportunities. Get advice to make the optimal choice.
Wie beantrage ich die Arbeitnehmersparzulage?
You apply for the employee savings allowance annually through your income tax return. Your financial institution electronically submits the necessary data to the tax office after you have consented to it. [4,5§13,§15]
