Take your occupational pension scheme with you: How to secure your supplementary pension when changing jobs
10.04.25
7
Minutes
Katrin Straub
Managing Director at nextsure
Changing jobs often raises questions about occupational pension schemes (bAV). Many employees are unsure whether they can transfer their occupational pension scheme and what steps are required to do so. This article explains, in a clear and practical way, how to successfully transfer your bAV.
The topic in brief and concise terms
If you change employer, you can usually take your company pension scheme (bAV) with you; entitlements from salary sacrifice are immediately vested.
There are various options: taking over the existing contract, transferring the capital, or premium-free/private continuation.
Pay attention to deadlines (usually one year for the application), possible costs and the tax aspects of the transfer.
Understanding the basics: your occupational pension portability options
If you change employer, the question arises: What happens to my occupational pension provision? The good news is that your accumulated contributions are generally not lost. You have various options for taking your occupational pension provision with you. The specific options depend on the implementation route of your occupational pension scheme and the date the contract was concluded. For contracts concluded after 2004, there is often a legal entitlement to transfer, especially in the case of direct insurance policies, pension funds or pension schemes. The transfer usually has to be requested within one year of changing jobs. It is important to clarify the details at an early stage in order to avoid financial disadvantages.
The so-called portability, i.e. the option of taking your occupational pension provision with you, is regulated in the German Occupational Pensions Act (BetrAVG), in particular in Section 4. This law creates the basis for employees not to lose the vested rights they have accrued. Many employees do not know that they may have a legal entitlement to transfer in the case of direct insurance policies, pension funds or pension schemes. The vesting of your entitlements plays a central role here; more on this in the next section.
Check vesting: your vested occupational pension entitlements
A key term in the context of transferring your occupational pension provision is vesting. Vested means that your entitlements to the promised company pension remain intact even if you change employer. For entitlements from salary sacrifice, i.e. contributions that you have paid yourself from your gross salary, immediate vesting applies. This means that these entitlements are secure from day one. The statutory employer contribution is also immediately vested.
For purely employer-funded commitments, certain deadlines apply. Under the current rules (since 1 January 2018), an employer-funded occupational pension scheme is vested if the employee is at least 21 years old on leaving and the commitment has existed for at least three years. For older commitments, different, longer deadlines may apply. Therefore, check carefully how long your commitment has been in place and what type of funding applies, so that you can assess your vesting correctly. Knowing your vested entitlements is the basis for the next steps in transferring your occupational pension provision.
Practical guide: How to successfully take your bAV with you
Once you have clarified your vested entitlements, it is time for the practical implementation of taking your occupational pension with you. There are essentially three ways to transfer your occupational pension. The first option is for the new employer to take over your existing contract unchanged and continue it. This is the simplest variant, but it requires the new employer’s consent, as they are not obliged to do so.
The second option is the transfer of the pension capital (funded capital transfer) to the provider of the new employer. Your saved capital is transferred into a new contract with the new employer’s provider. Please note that the transfer value must not exceed the contribution assessment ceiling of the statutory pension insurance scheme (in 2023, West EUR 87,600). The third option is to make the old contract paid-up and continue it privately or leave it dormant. This can make sense if a transfer is not possible or would be disadvantageous. Expert tip: Clarify early on with your new employer which option they offer and compare the terms carefully. Please note that fees may apply for the transfer.
The following steps typically need to be considered when transferring it:
Inform your former employer of the change and ask for the current status of your occupational pension scheme (transfer value).
Ask your new employer about the possibility of continuing or transferring your occupational pension scheme, ideally before signing the contract.
Submit the transfer application on time (usually within twelve months of changing jobs).
Review the new provider’s contractual documents carefully, especially with regard to costs and the guaranteed interest rate.
If necessary, seek independent advice to make the best decision for you.
Taking your occupational pension with you when changing employer therefore requires some initiative, but it secures your valuable pension entitlements.
Keeping costs and taxes in mind: Financial aspects of transferring an occupational pension scheme
Taking your occupational pension scheme with you may involve costs. In the case of a transfer of the transfer value, for example, initial and distribution costs may be incurred again, which reduce your returns. Some providers have agreed to cost-neutral transfers as part of transfer agreements, but this is not always the case. So ask explicitly about all fees that apply before agreeing to a transfer. It is important that the transfer value does not exceed the contribution assessment ceiling in order to avoid tax disadvantages (currently around EUR 90,600 in 2024).
From a tax perspective, the accumulation phase of the occupational pension scheme is usually favourable, as contributions are paid from gross salary and therefore save tax and social security contributions. When benefits are paid out in retirement, they are then taxed. If you take your occupational pension scheme with you, this basic principle usually remains in place. Cancelling the policy and paying out the capital during the accumulation phase is often disadvantageous, as the tax and social security contributions saved then have to be taxed retrospectively and high fees often apply. A careful review of the financial consequences is therefore essential.
Expert advice: avoid pitfalls and find the best solutions
Even though the legislator wants to make it easier to transfer occupational pension benefits, there are still some practical hurdles. Not every new employer is willing to take over an existing contract, especially if it comes from another provider or has different terms. Another common issue is a lack of awareness of the legal rules or the absence of alternative arrangements with the new employer. Our expert tip: Insist on your right to transfer the existing capital value if the requirements are met, to ensure a seamless continuation and avoid costs from taking out a new contract.
What should you do if the new employer refuses to take over the old contract or their own occupational pension scheme is less favourable? In such cases, one option may be to continue the old contract privately (if the implementation route allows this) or to make it paid-up. With private continuation, you pay the contributions from your net salary, which means you lose the tax and social security advantages of the savings phase. A paid-up policy at least secures the benefits and interest accrued so far. Carefully weigh up the pros and cons. Sometimes it is also worth considering whether a termination of the occupational pension makes sense, although this option is usually associated with significant disadvantages.
Here are some practical tips for structuring your arrangement:
Document your occupational pension commitment and the contributions paid to date in detail.
Speak to the new employer at least three months before the move.
Compare the terms of the old contract and the potentially new one (guaranteed interest rate, costs, investment opportunities).
Make sure the one-year deadline for submitting the transfer application is observed.
Seek independent advice in complex situations or where contract values are high.
A well-planned transfer of your occupational pension secures important building blocks for your financial future.
Secure your supplementary pension: nextsure supports you
Company pension provision is an important building block for securing your finances in retirement. The option of taking your company pension provision with you ensures that the entitlements you have built up remain in place even if you change employer. This does require a little initiative and careful review, but the effort is worthwhile in order to optimise your supplementary pension. Remember that a well-designed company pension provision should be planned for the long term.
At nextsure, we understand that the details of transferring your occupational pension can be complex. As your partner for digital insurance solutions, we help you gain clarity and make the right decisions for your retirement provision. Use our expertise to design your company pension provision optimally.
Request an individual risk assessment now: have your insurance situation reviewed free of charge and receive specific suggestions for improvement.
More useful links
Federal Ministry of Labour and Social Affairs (BMAS) provides comprehensive information on occupational pensions.
Your Pension provides detailed information on occupational pension provision in the context of changing jobs.
German Bundestag provides a PDF document with relevant information on occupational pensions.
German Pension Insurance offers a brochure on occupational pensions.
German Insurance Association (GDV) explains how occupational pension provision can be continued after changing employer.
Working Group for Occupational Pension Provision (aba-online) offers a definition of the term „transfer“ in the context of occupational pension provision (bAV).
Consumer Advice Centre provides a guide to occupational pensions.
Laws on the Internet (Federal Ministry of Justice) provides the full text of Section 4 of the Occupational Pensions Act.
FAQ
Which legal basis governs the portability of occupational pension provision?
The portability of occupational pension provision (portability) is governed primarily by Section 4 of the Occupational Pensions Act (BetrAVG).
What does vesting mean in a company pension scheme?
Vesting means that your entitlement to the company pension remains in place even if you leave the company before retirement. Contributions from salary conversion are immediately vested.
Does my new employer have to take over my old occupational pension scheme contract?
No, the new employer is not obliged to take over your old contract unchanged. However, they must offer you some form of occupational pension scheme (bAV) and can transfer the capital into their system if the conditions are met.
What is a transfer of cover capital?
In a transfer of cover capital, the accrued capital in your occupational pension scheme contract is transferred to a new contract with the new employer’s pension provider.
Can I continue my occupational pension privately as well?
Yes, depending on the implementation route, you can continue your bAV contract privately with your own contributions from your net salary, or make it paid-up if a transfer is not desired or possible.
What deadlines apply to the vesting of employer-financed occupational pension entitlements?
Since 1 January 2018, the following applies: the employer-financed occupational pension scheme is vested if, when the employee leaves, they are at least 21 years old and the commitment has existed for at least three years.
