Investment & Wealth
Occupational pension scheme
occupational pension entrepreneur
Occupational pension schemes for entrepreneurs: Strategies for a secure future
Company pension schemes are an important tool for entrepreneurs to ensure their own security. However, many managing directors underestimate the complexity and long-term commitments involved. Learn how to develop the right strategy and make optimal use of tax benefits.
The topic in brief and concise terms
Entrepreneurs have a powerful tool with the company pension scheme for their own retirement provision, but must pay attention to specific regulations for managing directors. [__6__2]
The choice of the right implementation method (e.g., direct insurance, support fund) is crucial and depends on individual goals and the company's situation. [__1__1,__6__2]
Tax benefits are significant, but require correct structuring to avoid pitfalls such as disguised profit distributions. [__7__2,__7__3]
Understanding the Basics of Occupational Pensions for Entrepreneurs
Occupational pensions (bAV) are more than just an additional benefit for entrepreneurs. They are a strategic tool for securing their own future and can enhance the attractiveness of your company. Approximately 37 percent of employees choose a company because of its bAV. [__2__2] Special rules apply to shareholder-managing directors (GGF), as they are often not subject to social security. [__6__2] Careful planning is therefore essential to close any gaps in retirement provision. The bAV is part of the three-pillar model of retirement provision in Germany. [__2__2] Choosing the right implementation method is crucial for success. Also, find out about the 3 layers of pension provision.
An overview of the five implementation methods of occupational pension schemes
Entrepreneurs have five implementation options available for occupational pensions. [__3__5] Each option has specific advantages and disadvantages that need to be considered. Direct insurance is a classic method where the company enters into a contract with an insurance provider. [__1__1] Contributions are tax-free up to eight percent of the contribution assessment ceiling. [__5__1] Pension funds and pension schemes are legally independent pension institutions. [__2__5] The support fund often offers more flexibility in terms of contribution amounts and is particularly interesting for high-earning managing directors, as contributions are often tax-free without limits. [__6__2,__1__1] A direct commitment (pension commitment) means the company itself provides the pension benefits and makes provisions for this. [__2__5] This variety enables a tailor-made company pension scheme.
The most common implementation methods for shareholder-managing directors are:
Direct insurance: Simple and flexible, good for smaller contributions. [__1__1]
Support fund: High flexibility, unlimited tax-free contributions possible. [__6__2,__1__1]
Pension commitment (direct commitment): Direct obligation of the company, often for higher pension goals. [__2__5]
Pension funds: Often offer more promising capital investments. [__3__5]
Pension scheme: External, regulated pension institution. [__2__5]
The selection largely depends on the individual situation and goals of the entrepreneur.
Maximising Tax Benefits and Pitfalls for Entrepreneurs
The occupational pension scheme (bAV) offers significant tax advantages for entrepreneurs and their companies. Contributions to the bAV can often be deducted as business expenses, thereby reducing the company's tax burden. [__7__2] For employees (and thus for salaried managing directors), contributions up to eight percent of the contribution assessment ceiling of the statutory pension insurance are tax-free. [__7__2] In 2024, this amounts to up to EUR 7,248. Be aware of the exact contribution assessment ceilings, as they can change annually. [__2__4] Upon retirement, benefits are then taxable, often at a lower personal tax rate. [__3__4] A potential pitfall can be the so-called hidden profit distribution (vGA) if commitments to managing directors are not reasonably or customarily structured. Learn more about how you can deduct your bAV for tax purposes.
Practical examples and design tips for corporate pensions
A 45-year-old shareholder-managing director with an annual salary of 120,000 euros wants to close his pension gap. A combination of direct insurance to maximize tax-free limits and a support fund for additional contributions could be sensible. [__6__2,__1__1] Our expert tip: Have the adequacy of the provision regularly checked. The financial viability and serviceability of the promise are important criteria for tax recognition. [__7__3] For the direct commitment, clear rules on financial feasibility and waiting times must be established, for example. [__7__3] Careful documentation of all resolutions is essential, especially for controlling managing directors. [__10__5] Also consider whether a pension insurance for the self-employed could be a supplement.
Key design tips include:
Early start: The earlier you begin, the lower the monthly burden for a respectable capital.
Regular adjustment: Review your occupational pension every three to five years and adjust it to changed life circumstances.
Risk coverage: Consider coverage for occupational disability and survivor's benefits. [__5__1]
Professional advice: Seek independent advice to find the optimal solution for your specific situation.
These points help create a solid foundation for your retirement provision.
Current case law and its impact on entrepreneurs
The case law on occupational pensions (bAV) is constantly evolving. For example, the Federal Labour Court (BAG) has clarified that employers are generally not obliged to provide comprehensive information about all details of occupational pensions. [__4__1] Nevertheless, careful drafting of pension commitments is essential. A judgment from 18 February 2020 (3 AZR 206/18) dealt with the duty to inform in the context of salary conversion. [__4__1] Our expert tip: Stay informed about current rulings to minimise risks. The Lower Saxony regional labour court decided on 20 April 2023 (3 Sa 86/22 B) on the entitlement to a bAV based on collective agreement reference clauses. [__4__2] These rulings highlight the complexity and the necessity of expert advice. The importance of occupational pensions is often redefined by such rulings.
Optimising the role of the support fund for managing directors
The support fund is a popular implementation route for shareholder-managing directors as it allows for high pension benefits. [__12__3] Contributions are often unlimitedly deductible as business expenses. [__11__5] There are two main types: the flat-rated and the reinsured support fund. [__11__1] In the reinsured variant, the support fund takes out insurance to finance the promised benefits. [__11__1] This provides high security, even in the event of the company's insolvency, as the claims are protected by the Pension Security Association (PSVaG). [__11__5] The flexibility in contribution amounts is a key advantage. [__11__1] Administrative costs are generally low and also tax-deductible. [__11__4] For comprehensive pension planning, a Rürup pension can also be considered.
Use direct insurance as a component of executive pension provision
The direct insurance is often the entry point into occupational pension schemes for shareholder-managing directors. [__1__1] It is relatively easy to administer and balance-neutral. [__12__3] Contributions up to eight percent of the contribution assessment ceiling (in 2021 it was 6,816 euros annually) can be tax-favored. [__1__1] The direct insurance can also be continued privately after leaving the company. [__12__3] It is well suited to securing basic needs or as a supplement to other implementation methods. For higher retirement goals, direct insurance alone is often not sufficient. [__13__5] A combination with support funds or pension commitments is often sensible to ensure adequate retirement provision for shareholder-managing directors. [__13__5] Also consider a potential disability insurance for self-employed individuals.
Benefits of direct insurance for shareholder-managing directors:
Simple setup and administration. [__1__1]
Tax incentives for contributions up to certain limits. [__1__1]
Balance neutrality for the company. [__12__3]
Possibility of private continuation. [__12__3]
Option for survivor and disability coverage. [__1__1]
These aspects make direct insurance a solid foundational building block.
Conclusion and Your Next Step to an Optimized Corporate Pension Scheme
Company pensions are a powerful tool for entrepreneurs to secure their financial future. The complexity of the various implementation methods and tax regulations requires careful planning and individual adjustment. A well-structured company pension scheme can not only significantly improve retirement benefits but also optimise the tax burden and contribute to employee retention. The key to success lies in well-founded advice and a strategy tailored to your needs. Use the expertise of professionals to avoid pitfalls and unlock the full potential of your company pension scheme. Remember that private pension contributions can also complement your retirement provision. At nextsure, we are happy to help you find the optimal solution for your company pension as an entrepreneur. Request an individual risk analysis now: Get your insurance situation checked for free and receive specific optimisation proposals.
More useful links
Wikipedia offers a comprehensive overview of occupational pension schemes.
The Federal Statistical Office (Destatis) provides a press release on occupational pensions.
The Federal Statistical Office (Destatis) offers an article on retirement provision.
The Working Group for Occupational Pensions (aba) provides information on labour cost surveys and expenses in the context of occupational pensions.
Statista offers a topic page on occupational pensions with relevant statistics.
Wikipedia explains the concept of salary conversion.
Wikipedia provides detailed information on the Occupational Pensions Act.
Wikipedia informs about the Retirement Income Act.
The Working Group for Occupational Pensions (aba) offers an overview of current statistics on occupational pensions.
WTW (Willis Towers Watson) provides a report on the impact of demographic change on occupational pensions.
FAQ
Is an occupational pension scheme compulsory for me as an entrepreneur?
If you have employees, you are obliged to offer them an occupational pension scheme as part of salary conversion. [__2__2] For your own provision as an entrepreneur (e.g. managing director), it is not mandatory per se, but highly recommended to close any pension gaps. [__6__2]
What role does my corporate form play in the occupational pension scheme?
The corporate form is very important. As a shareholder-managing director of a GmbH, you have different options and tax conditions compared to a sole trader or freelancer. [__6__2]
What happens to my occupational pension scheme if I sell my company?
That depends on the implementation method. Pension commitments can reduce the company's value and must be assumed by the buyer. [__8__3] Direct insurance policies are often easier to transfer or can be continued privately. [__12__3]
Can I set up an occupational pension scheme for myself as an entrepreneur without employees?
As a shareholder-managing director of a corporation (e.g. GmbH), you can set up an occupational pension scheme for yourself. For sole entrepreneurs without employees, the options for classic occupational pension schemes are limited; in this case, private pension solutions such as the Rürup pension are often more suitable. [__5__1,__6__2]
How high should my contributions to the occupational pension scheme be as an entrepreneur?
The contribution amount is very individual and depends on your pension goal, financial situation, and tax conditions. A detailed analysis of your pension gap is the first step. Often, up to ten to fifteen percent of gross income is recommended.
What coverages (e.g. disability insurance) can I integrate into my entrepreneur's occupational pension scheme?
Many implementation methods of the occupational pension scheme, like direct insurance or support funds, allow the integration of a disability insurance or a survivor's coverage. This is particularly important for entrepreneurs. [__5__1]
