Occupational Pension Maximum Amount: How to Optimize Your Contributions for 2025
14 May 2025
3
Minutes
Katrin Straub
CEO at nextsure
Occupational pensions are an important component for your financial future. But do you know the maximum amount you can contribute tax and social security-free? This article shows you how to make the most of the current regulations for 2025.
The topic in brief and concise terms
Up to €7,728 per year can be paid into the company pension scheme tax-free and €3,864 of this amount can be paid in free of social contributions for 2025.
The employer must contribute at least fifteen percent in salary conversion if they save on social security contributions.
The legal basis for tax exemption is § 3 No. 63 EStG.
Quick Facts: The maximum bAV amounts for 2025 at a glance
For the year 2025, new maximum limits apply for company pension schemes. Contributions are tax-free up to eight percent of the contribution assessment ceiling (BBG) of the statutory pension insurance. This corresponds to an annual amount of 7,728 euros or 644 euros monthly. Of this, up to four percent of the BBG, i.e., 3,864 euros annually or 322 euros monthly, are also exempt from social security contributions. This regulation allows a significant portion of gross income to be used for retirement provision, benefiting from tax and social security advantages. Knowing these values is crucial to fully benefit from the tax advantages of the company pension scheme. These limits are adjusted annually and are therefore an important factor in planning your retirement provision.
Practical Part: How the Maximum Amounts Specifically Affect
Let's assume an employee wants to utilise the maximum tax-free amount for 2025. They can contribute 644 euros of their gross salary per month into a direct insurance, pension fund, or pension scheme. Of these 644 euros, 322 euros are exempt from social security contributions. This means that no contributions for health, care, pension, and unemployment insurance are required for the 322 euros. For the other 322 euros (up to the tax allowance of 644 euros), social contributions apply, but no taxes are levied. This division is an important factor when calculating the net burden and the real savings benefit. An employer who provides a subsidy must contribute at least fifteen per cent of the converted earnings if they save social insurance contributions as a result. This can further enhance the attractiveness of employer-funded occupational pensions. The exact calculation depends on individual factors such as tax class and income.
The most common implementation methods of occupational pensions are:
Direct insurance
Pension fund
Pension scheme
Support fund
Direct commitment (pension commitment)
The choice of implementation method also affects the possibilities for design and the deductibility of contributions. It is advisable to carefully examine the different options.
Expert Depth: Legal Foundations and Design Tips
The tax incentives for contributions to occupational pension schemes are primarily regulated in Section 3 No. 63 of the Income Tax Act (EStG). This section states that employer contributions to a direct insurance policy, pension fund, or pension scheme are tax-free up to eight per cent of the contribution assessment ceiling of the general pension insurance. The social security exemption for part of these contributions (up to four percent of the BBG) is derived from Section 1 (1) Sentence 1 No. 9 of the Social Insurance Remuneration Ordinance (SvEV). Our expert tip: When changing employers, check whether you can take your occupational pension scheme (bAV) with you and how the maximum amounts with the new employer affect you. The limits apply per employer. For commitments made before 2005 (old commitments according to § 40b EStG a. F.), different regulations partially apply, and contributions from these can be credited against the new tax-free maximum amount. It is important to know the details of your contract precisely. Upon termination of the employment relationship, the question often arises about the vesting of entitlements.
Important aspects in structuring your occupational pension scheme include:
The amount of your own contributions and possible employer subsidies.
The choice of the appropriate implementation method for your situation.
The flexibility of the contract when your life circumstances change.
The regulations on the vesting of your entitlements, typically after three years for employer-financed contributions.
The impact on your state pension and the subsequent taxation of bAV benefits.
Careful planning considering these points helps to fully grasp the importance of the bAV and avoid future surprises.
Optimal use of the maximum amounts for occupational pension schemes secures your future
Occupational pension provision is a powerful tool to close your own pension gap. By cleverly using the maximum amounts for tax and social security exemption, you can significantly increase your savings rate without excessively burdening your net income. In 2025, the tax-free maximum amount is 7,728 euros annually, of which 3,864 euros are exempt from social contributions. Don't miss out on this government support. Remember that the employer subsidy of at least fifteen percent in the case of salary conversion also makes your bAV additionally attractive. At nextsure, we assist you in finding the solution that suits you within the three pillars of pension provision. The right strategy depends on your individual situation. Evaluate whether occupational pension provision is sensible for you.
Request an individual risk analysis now: Have your insurance situation reviewed free of charge and receive concrete optimization proposals.
More useful links
Gesetze im Internet provides the full text of the Betriebsverfassungsgesetz (BetrVG), which contains important regulations on occupational pensions.
Techniker Krankenkasse offers detailed information on allowances and regulations for company pensions.
Bundesfinanzministerium provides official information on the tax treatment of occupational pensions.
Deutsche Rentenversicherung offers a comprehensive definition and explanation of occupational pensions.
Bundesministerium für Arbeit und Soziales provides official information on occupational pensions and their significance for additional retirement provision.
Statistisches Bundesamt (Destatis) provides statistical data and analyses on entitlements from employment-based pension schemes.
Deutsche Rentenversicherung explains the concept of salary conversion for occupational pensions in detail.
FAQ
What is the maximum amount for occupational pensions in 2025?
In the year 2025, you can contribute up to €7,728 to your occupational pension scheme tax-free. Out of this amount, an additional €3,864 will remain exempt from social insurance contributions.
How much does my employer have to contribute to the company pension scheme?
If you convert earnings into a direct insurance, pension fund or pension scheme, and your employer saves social security contributions as a result, they are legally obliged to pay at least fifteen percent of the converted amount additionally into your contract.
What role does § 3 No. 63 EStG play for the maximum amount in occupational pension schemes?
Section 3 No. 63 of the Income Tax Act (EStG) is the key provision that regulates the tax exemption for employer contributions (including those arising from remuneration conversion) to certain implementation methods of company pension schemes up to eight percent of the contribution assessment ceiling.
Are the maximum amounts for occupational pensions the same for all implementation methods?
The maximum amounts for tax and social insurance purposes according to § 3 No. 63 EStG primarily apply to direct insurance, pension funds, and pension schemes. For direct commitments and support funds, there is no tax limitation on contributions during the savings phase, but social insurance exemption is also limited to four percent of the BBG here.
What happens if my contributions exceed the maximum occupational pension amount?
Contributions that exceed the tax-free maximum of eight percent of the contribution assessment ceiling (BBG) must be taxed regularly. Contributions over the social security contribution-free maximum of four percent of the BBG are subject to social security contributions.
Does the maximum amount for occupational pension plans change annually?
Yes, the maximum amount for occupational pension schemes is linked to the contribution assessment ceiling of the statutory pension insurance, which is usually adjusted annually. Therefore, the maximum amounts for tax and social contribution exemptions also change.
