Occupational pension maximum amount: How to optimise your contributions for 2025
14.05.25
8
Minutes
Katrin Straub
Managing Director at nextsure
Occupational pension provision is an important building block for your financial future. But do you know the maximum amount you can contribute free of tax and social security contributions? This article shows you how to make the best use of the current rules for 2025.
The topic in brief and concise terms
For 2025, up to EUR 7,728 per year can be paid into the occupational pension scheme tax-free, of which EUR 3,864 can be paid free of social security contributions.
The employer must contribute at least fifteen per cent in the case of salary sacrifice if they save on social security contributions.
The legal basis for tax exemption is Section 3 No. 63 of the German Income Tax Act (EStG).
Quick Facts: The bAV maximum contribution amounts for 2025 at a glance
For 2025, new maximum amounts apply to occupational pensions. Contributions are tax-free up to eight per cent of the contribution assessment ceiling (BBG) of the statutory pension insurance scheme. This corresponds to an annual amount of EUR 7,728 or EUR 644 per month. Of this, up to four per cent of the BBG, i.e. EUR 3,864 per year or EUR 322 per month, are also exempt from social security contributions. This arrangement makes it possible to use a significant part of gross income for retirement provision with tax and social security advantages. Knowing these figures is crucial in order to fully exploit the tax advantages of bAV. These limits are adjusted annually and are therefore an important factor when planning your retirement provision.
Practical section: How the maximum amounts affect things in practice
Suppose an employee wants to make use of the maximum tax-exempt amount for 2025. They can pay 644 euros a month from their gross salary into a direct insurance policy, a pension fund or a pension scheme. Of these 644 euros, 322 euros are exempt from social security contributions. This means that no contributions to health, long-term care, pension and unemployment insurance are due on 322 euros. For the remaining 322 euros (up to the tax ceiling of 644 euros), social security contributions are due, but no taxes. This split is an important aspect when calculating the net burden and the actual savings benefit. An employer that provides a top-up must contribute at least fifteen per cent of the converted pay if it saves social security contributions as a result. This can further increase the attractiveness of employer-funded occupational pension provision (bAV). The exact calculation depends on individual factors such as tax class and income.
Here are the most common implementation methods of the occupational pension scheme:
Direct insurance policy
Pension fund
Pension scheme
Support fund
Direct commitment (pension commitment)
The choice of implementation route also affects the design options and the deductibility of contributions. It is advisable to carefully review the various options.
Expert depth: legal foundations and design tips
The tax relief for contributions to occupational pension provision is mainly governed by § 3 No. 63 of the Income Tax Act (EStG). This section stipulates that employer contributions to a direct insurance policy, a pension fund or a pension scheme are tax-free up to eight per cent of the contribution assessment ceiling of the statutory pension insurance scheme. Social security exemption for part of these contributions (up to four per cent of the BBG) arises from § 1 (1) sentence 1 no. 9 of the Social Security Remuneration Ordinance (SvEV). Our expert tip: When changing employers, check whether you can take your existing bAV with you and how the maximum amounts affect you with your new employer. The limits apply per employer. For commitments granted before 2005 (legacy commitments under former § 40b EStG), different rules apply in some cases, and contributions from these may be offset against the new tax-free maximum amount. It is important to know the details of your contract precisely. On termination of employment, the question of the vested rights to benefits often arises.
Important aspects in structuring your bAV are:
The amount of your own contributions and any employer subsidies.
The choice of the suitable implementation route for your situation.
The flexibility of the contract if your personal circumstances change.
The rules on vesting of your entitlements, typically after three years for employer-financed contributions.
The impact on your statutory pension and the deferred taxation of the bAV benefits.
Careful planning, taking these points into account, helps you fully understand the significance of bAV and avoid later surprises.
Optimal use of the maximum occupational pension contributions secures your future
Occupational pension provision is a powerful tool for closing your own pension gap. By making smart use of the maximum limits for tax and social security exemption, you can significantly increase your savings rate without placing too much of a burden on your net income. In 2025, the annual tax-free maximum amount is EUR 7,728, of which EUR 3,864 is exempt from social security contributions. You should not miss out on this state support. Remember that the employer contribution of at least fifteen per cent in the case of salary conversion also makes your bAV additionally attractive. At nextsure, we support you in finding the solution that is right for you within the three pillars of retirement provision. The right strategy depends on your individual situation. Weigh up whether a company pension scheme is worthwhile for you.
Request an individual risk analysis now: Have your insurance situation checked free of charge and receive specific recommendations for optimisation.
More useful links
Laws on the Internet provides the full text of the Works Constitution Act (BetrVG), which contains important regulations on company pension schemes.
Techniker Krankenkasse provides detailed information on allowances and regulations relating to company pension schemes for businesses.
Federal Ministry of Finance provides official information on the income tax treatment of company pension schemes.
German Pension Insurance provides a comprehensive definition and explanation of occupational pension provision.
Federal Ministry of Labour and Social Affairs provides official information on occupational pension provision and its significance for supplementary retirement provision.
Federal Statistical Office (Destatis) provides statistical data and analyses on entitlements from employment-related retirement provision systems.
German Pension Insurance explains the concept of deferred compensation for company pension schemes in detail.
FAQ
What is the maximum amount for occupational pension provision in 2025?
In 2025, you can pay up to EUR 7,728 into your occupational pension scheme tax-free. Of this amount, EUR 3,864 is also exempt from social security contributions.
How much does my employer have to contribute to my occupational pension?
If you convert remuneration into a direct insurance policy, a pension fund or a pension scheme, and your employer thereby saves on social security contributions, they are legally required to pay at least fifteen per cent of the converted amount additionally into your contract.
What role does Section 3 No. 63 of the German Income Tax Act play in the maximum bAV amount?
Section 3 No. 63 of the German Income Tax Act (EStG) is the central provision in the Income Tax Act that governs the tax exemption of employer contributions (including those from salary sacrifice) to certain implementation routes of occupational pension provision (bAV) up to eight per cent of the assessment ceiling.
Are the maximum bAV amounts the same for all implementation routes?
The tax and social security contribution limits under Section 3 No. 63 EStG apply primarily to direct insurance policies, pension funds and pension schemes. For direct commitments and support funds, there is no tax limit on contributions during the accumulation phase, but exemption from social security contributions is also limited here to four per cent of the BBG.
What happens if my contributions exceed the maximum bAV amount?
Contributions exceeding the tax-free maximum amount of eight per cent of the BBG must be taxed as normal. Contributions above the social security contribution-free maximum amount of four per cent of the BBG are subject to social security contributions.
Does the bAV maximum amount change annually?
Yes, the maximum bAV amount is linked to the contribution assessment ceiling of the statutory pension insurance scheme, which is usually adjusted annually. Therefore, the maximum amounts exempt from tax and social security contributions also change.
