Occupational benefits: Your guide to supplementary pensions and financial security in retirement
26 May 2025
6
Minutes
Katrin Straub
Managing Director at nextsure
The state pension alone is often no longer sufficient to secure your standard of living in retirement. An occupational pension scheme can fill this gap and offers attractive benefits. Find out how to make the most of your company pension.
The topic in brief and concise terms
The occupational pension benefit is an important supplement to the state pension, promised by the employer and offering tax advantages.
Employees have a legal right to salary conversion, and employers must contribute at least fifteen percent since 2019/2022 if they save on social security contributions.
There are five implementation methods (direct commitment, support fund, direct insurance, pension fund, pension fund) with different characteristics and legal frameworks.
Quick Facts: The essentials of occupational pension benefits at a glance
The occupational pension benefit is a promise from your employer for your retirement, disability or survivor's provision. Since 2002, employees have had a legal entitlement to salary conversion, in which parts of the gross salary are channeled into a company pension scheme. Contributions during the savings phase are tax-free up to eight percent of the contribution assessment ceiling and exempt from social security contributions up to four percent. There are five methods of implementation: direct promise, support fund, direct insurance, pension fund, and pension plans. Benefits are taxed at a later stage, often at a lower personal tax rate at that time.
Practical Section: How Company Pension Benefits Work in Everyday Life
Imagine you earn €3,500 gross per month and decide to invest €150 of that through salary conversion into a company pension scheme. Due to savings in taxes and social security contributions, your net cost is often about half, approximately €75. Since 2019, your employer is legally required to contribute at least fifteen percent of the converted amount as a subsidy if they save social security contributions. In this example, that would be an additional €22.50 that goes into your contract. This helps your pension capital grow faster.
Another example: A 30-year-old employee pays €100 monthly through salary conversion. Her employer adds the compulsory subsidy of fifteen percent (€15). Assuming an annual return of three percent, she would have already saved over €90,000 after 37 years. The exact amount of the future pension depends on various factors, such as the return and the chosen implementation method. It is advisable to calculate different scenarios. The tax treatment of the contributions is a significant advantage.
The five implementation methods offer different advantages and disadvantages:
Direct insurance: Employer takes out life insurance for the employee; very common.
Pension fund: Legally independent pension institution, often in companies bound by collective agreements.
Pension funds: Offer more flexible investment opportunities, potentially higher returns, but also higher risks.
Support fund: Pension institution funded by the employer; employee has no direct legal claim against the fund.
Direct commitment (pension commitment): Employer pays pension directly from company assets; insolvency protection through the Pension Protection Association (PSVaG).
The choice of implementation method is generally up to the employer. They must inform you about the chosen form and conditions. The benefits for employers should not be underestimated, as they can retain employees and save on ancillary wage costs. These basics will help you understand the various options better.
Expert Depth: Legal Foundations and Current Judgements on Company Pension Schemes
The legal basis for company pension benefits is the German Act to Improve Occupational Pensions (BetrAVG). It governs, among other things, entitlement to salary conversion (§ 1a BetrAVG), the vesting of pension rights (§ 1b BetrAVG), and the duty to review ongoing benefits (§ 16 BetrAVG). Tax aspects are primarily regulated in the Income Tax Act (EStG), particularly § 3 No. 63 EStG concerning the tax exemption of contributions. Detailed knowledge of these paragraphs is essential for a deep understanding.
Current rulings continuously shape the landscape of occupational pensions. The Federal Labour Court (BAG) has, for example, repeatedly addressed the employer's liability for benefit reductions by pension funds (e.g., BAG, judgment of 14.03.2023, 3 AZ R 197/22). It clarified that the employer is generally liable for the promised benefit, even if implementation is via an external provider. Another important topic is the shift from pension commitments to capital benefits, where the BAG sets requirements on proportionality and protection of legitimate expectations (e.g., BAG, judgment of 20.06.2023, 3 AZR 231/22). Such rulings demonstrate how dynamic the legal field is and highlight the importance of well-founded advice on occupational pensions.
Our expert tip: Pay close attention to the wording regarding the adjustment of pension benefits when signing contracts. According to § 16 BetrAVG, the employer is obligated to review the adjustment of ongoing benefits every three years and decide based on reasonable discretion. Criteria include the interests of the pension recipient and the company's financial situation. A clear regulation here can prevent future disagreements. Also, inform yourself about what happens to your claims in the event of a termination.
Design Tips: How to Optimise Your Corporate Pension Scheme
To optimise your occupational pension benefits, you should consider a few points. Use the maximum possible tax and social security-free allowance for your contributions. In 2025, up to 7,728 euros can be paid in tax-free and 3,864 euros social security-free. This significantly maximises your savings during the accumulation phase. Inquire with your employer about the level of the employer subsidy. Since 2022, this has also been mandatory for existing contracts (concluded before 2019) at a rate of at least fifteen per cent of the conversion amount if the employer saves social security contributions.
Check the flexibility of your contract. Is it possible to transfer occupational pensions when changing employers? Since 2005, there has been a legal entitlement to portability for newly concluded contracts of certain types, provided the transfer value does not exceed a certain limit. Also clarify what options you have in the event of payment difficulties, such as a contribution suspension or reduction. Early planning on whether occupational pensions are worthwhile pays off.
Our expert tip: Do not be solely guided by high return promises. Also consider the security of the investment and the cost structure of the chosen product. A transparent presentation of all fees is crucial here. Compare different offers, if your employer allows you to choose, or you can obtain additional information from an external adviser. The termination and payout of an occupational pension scheme are often associated with disadvantages and should be carefully considered.
Consider the following aspects in your selection and design:
Amount of your own contributions and employer subsidies.
Flexibility in adjusting contributions and payment breaks.
Options when changing employer (portability).
Provisions for protection of dependents and disability insurance.
Cost structure and transparency of the offer.
Security and return opportunities of the capital investment.
Options upon payout (pension, capital, or combination).
A careful consideration of these points leads to a tailor-made pension solution. This ensures you are well prepared to lay the groundwork for a financially secure future.
More useful links
Bundesministerium für Arbeit und Soziales (BMAS) provides comprehensive information on occupational pensions.
Deutsche Rentenversicherung offers an informative brochure on occupational pensions.
Gesetze im Internet provides the full text of the Occupational Pensions Act (BetrAVG).
Statista delivers current statistics and data on occupational pensions in Germany.
Gesamtverband der Deutschen Versicherungswirtschaft (GDV) provides statistics on occupational pension contracts.
Wikipedia offers a comprehensive article on occupational pensions with basic information.
ifo Institut publishes academic papers on pensions, also covering occupational pensions.
Bundeszentrale für politische Bildung (bpb) provides information on occupational pensions in the context of pension policy.
Bundesfinanzministerium offers a definition of occupational pensions in its glossary.
FAQ
Wie hoch sind die steuerfreien Beiträge zur betrieblichen Versorgungsleistung?
Im Jahr 2025 können Beiträge bis zu acht Prozent der Beitragsbemessungsgrenze der gesetzlichen Rentenversicherung (West) steuerfrei in eine Direktversicherung, Pensionskasse oder einen Pensionsfonds eingezahlt werden. Das sind 7.728 Euro jährlich. Sozialabgabenfrei sind Beiträge bis zu vier Prozent (3.864 Euro).
Welche Durchführungswege gibt es bei der betrieblichen Versorgungsleistung?
Es gibt fünf Durchführungswege: Direktzusage (Pensionszusage), Unterstützungskasse, Direktversicherung, Pensionskasse und Pensionsfonds. Jeder Weg hat spezifische Merkmale bezüglich Finanzierung, Haftung und Insolvenzschutz.
Ist der Arbeitgeberzuschuss zur betrieblichen Versorgungsleistung Pflicht?
Ja, seit Januar 2019 für Neuverträge und seit Januar 2022 auch für bestehende Verträge zur Entgeltumwandlung (die vor 2019 abgeschlossen wurden) muss der Arbeitgeber einen Zuschuss von mindestens fünfzehn Prozent des umgewandelten Entgelts leisten, sofern er dadurch Sozialversicherungsbeiträge einspart.
Wie werden Leistungen aus der betrieblichen Versorgungsleistung im Alter besteuert?
Leistungen aus der betrieblichen Altersversorgung unterliegen der sogenannten nachgelagerten Besteuerung. Das bedeutet, die Beiträge sind in der Ansparphase steuerbegünstigt, die späteren Renten oder Kapitalauszahlungen müssen dann aber mit dem persönlichen Einkommensteuersatz versteuert werden. Zusätzlich fallen Beiträge zur Kranken- und Pflegeversicherung an.
Was ist der Unterschied zwischen einer Direktzusage und einer Direktversicherung?
Bei einer Direktzusage (Pensionszusage) verpflichtet sich der Arbeitgeber, die Versorgungsleistungen direkt aus dem eigenen Betriebsvermögen zu zahlen. Bei einer Direktversicherung schließt der Arbeitgeber eine Lebens- oder Rentenversicherung auf das Leben des Arbeitnehmers bei einem externen Versicherungsunternehmen ab.
Kann ich meine betriebliche Versorgungsleistung kündigen und mir auszahlen lassen?
Eine vorzeitige Kündigung und Auszahlung ist in der Regel nicht vorgesehen und oft mit Nachteilen verbunden, wie dem Verlust von Förderungen oder steuerlichen Konsequenzen. Die Bedingungen hängen vom spezifischen Vertrag und Durchführungsweg ab. Eine <a href="/blog/betriebliche-altersvorsorge-kundigen-und-auszahlen">vorzeitige Auszahlung</a> ist nur in engen Grenzen möglich.
