Vesting in occupational pension provision: How to secure your entitlements
14.06.25
10
Minutes
Katrin Straub
Managing Director at nextsure
Occupational pension provision is an important building block for your financial future. But what happens to your entitlements if you change employer or the employment relationship ends prematurely? The vesting of your occupational pension provision secures your accrued entitlements.
The topic in brief and concise terms
The vesting of occupational pension provision safeguards your pension entitlements when you change employer; since 2018, a three-year commitment and an age of 21 have usually been sufficient.
With salary sacrifice, your contributions to the occupational pension scheme are immediately vested, including the employer contribution.
The amount of the vested entitlement is calculated differently depending on the type of promise, often pro rata or based on the contributions paid in.
Quick Facts: Vesting of the occupational pension at a glance
Vesting of your occupational pension provision means that your entitlements are secured even if you change jobs. Since 1 January 2018, the following applies: your entitlement remains in place if you are at least 21 years old when you leave and the commitment has existed for at least three years. In the case of salary sacrifice, your entitlements are even vested immediately. The start date of the entitlement is the point at which the employer makes the commitment. These rules significantly protect the retirement provision you have built up.
Understanding the basics: What exactly does vesting mean?
Vesting in the context of occupational pension provision (bAV) means that your accrued entitlements to pension benefits remain in place even if your employment ends before the pension benefit event occurs. This is particularly relevant if, for example, you change employer. The legal basis for this is primarily Section 1b of the Occupational Pensions Act (BetrAVG). If you meet certain age and duration requirements for the promise, your entitlements can no longer be taken away from you. For promises granted from 1 January 2018 onwards, you must be at least 21 years old when your employment ends, and the pension promise must have existed for at least three years. For older promises, different time limits apply in some cases, for example a promise duration of five years with a minimum age of 25 for promises between 2009 and 2017. The importance of occupational pension provision as part of your remuneration is underlined by this. Vesting therefore secures part of your financial provision in old age, regardless of your further career planning. It is important to know the deadlines that apply to your promise.
Deadlines and requirements: When do your occupational pension entitlements become vested?
The deadlines for vesting in occupational pension provision are clearly defined and depend on the date of the commitment. For commitments made from 1 January 2018 onwards, a minimum commitment period of three years applies and the employee must be at least 21 years old when leaving. For example: a commitment was made on 1 July 2022, the employee is 26 years old; the occupational pension scheme will vest on 1 July 2025. For commitments issued between 1 January 2009 and 31 December 2017, the minimum age is 25 and the commitment must have existed for five years. Older commitments, for example before 2001, sometimes had a minimum age of 35 and a commitment period of ten years. It is important that, in the case of financing through salary sacrifice, the entitlement vests immediately. This also applies to the statutory employer contribution of 15 per cent. Knowing these deadlines is crucial in order to take the occupational pension scheme with you when changing jobs or secure it in some other way. The exact conditions can be found in Sections 1b and 30f of the BetrAVG.
Here is an overview of the most important deadlines for employer-funded commitments:
Commitment from 01/01/2018: minimum age 21 years, commitment for at least 3 years.
Commitment 01/01/2009 – 31/12/2017: minimum age 25 years, commitment for at least 5 years.
Commitment 01/01/2001 – 31/12/2008: minimum age 30 years, commitment for at least 5 years.
Commitment before 31/12/2000: often minimum age 35 years and commitment for 10 years or other combinations.
These deadlines safeguard your entitlements even if you leave the company early. A move to another EU Member State also does not affect vesting.
Special case salary sacrifice: Immediate protection for your contributions
A particularly favourable vesting rule for occupational pension provision applies in the case of salary sacrifice. If you pay part of your salary into an occupational pension scheme, these entitlements become immediately vested under statutory law. This means that, from the first contribution onwards, your converted remuneration is protected, regardless of how long you have been with the company or your age. This rule is set out in Section 1b(5) of the BetrAVG. The reason for this is that it is your own salary that is being used for retirement provision. The mandatory employer contribution of at least 15 per cent for direct insurance policies, pension funds or pension schemes is also immediately vested in the case of salary sacrifice. This offers a high level of security for your pension contributions. If you change employer and the new employer does not take over the direct insurance policy, your entitlements from the salary sacrifice arrangement still remain in place. You then generally have the right to continue the insurance with your own contributions.
Vested entitlement by amount: How much occupational pension are you entitled to?
If your entitlement to occupational pension provision has vested and you leave the company early, the question arises as to the amount of your future company pension. The calculation methods are laid down in Section 2 of the BetrAVG and vary depending on the type of commitment and the implementation route. For defined benefit commitments, the pro rata method (m/n method) is often used. Here, the pension benefit that can be accrued is set in proportion to the actual period of employment against the possible period of employment up to the fixed retirement age. For example: with a promised pension of EUR 200 and a possible period of employment of 501 months, compared with an actual 181 months, this results in an entitlement of around EUR 72. For contribution-based defined benefit commitments and salary conversion arrangements granted from 1 January 2001 onwards, you are entitled to the benefit earned from the contributions allocated up to the date of leaving (Section 2(5a) BetrAVG). This avoids a follow-up financing risk for the employer, as only the actual contributions count. Under a contribution commitment with a minimum benefit, the vested entitlement is calculated from the sum of the promised contributions minus risk costs. Under the insurance-contract-based method, often used for direct insurance policies and pension funds, the accumulated balance is deemed sufficient. Here, the surrender value of the occupational pension provision may play a role, although payment before retirement begins is only possible in very limited circumstances.
The key calculation bases are:
Pro rata method (m/n): Time-apportioned calculation for defined benefit commitments.
Earned vested entitlement: For contribution-based commitments and salary conversion (from 2001).
Contributions paid plus investment returns: For contribution commitments with a minimum benefit.
Insurance-contract-based method: The balance in the contract is decisive (direct insurance/pension fund).
The exact calculation can be complex and depends on your individual pension commitment.
Expert depth: Recent rulings and drafting tips on vesting
Case law on the vesting of occupational pension schemes is continually evolving. A judgment of the Berlin-Brandenburg Regional Labour Court (case no. 15 Sa 1443/20) made it clear that the right to continue a direct insurance policy with own contributions under Section 1b(5) BetrAVG does not automatically give rise to a claim for the insurance policyholder status to be transferred to the employee. As a rule, the employer remains the policyholder. The Federal Labour Court (BAG) has repeatedly addressed aspects of vesting, for example in the context of employer subsidies or the adjustment of company pensions. Our expert tip: Check your pension commitment carefully for the vesting provisions and the calculation of the amount of your vested entitlement. If you change employer, pay attention to what options there are for transfer or continuation. Under Section 4 BetrAVG, a transfer of the pension capital to the new employer is possible under certain conditions, but often requires the consent of all three parties (former employer, new employer, employee). In the case of a direct insurance policy, once the vesting requirements have been met, the employer can no longer revoke the beneficiary designation. If the employer becomes insolvent, the Pension Protection Association (PSVaG) steps in in many cases to safeguard vested entitlements. However, this does not apply equally to all implementation methods. If in doubt, seek advice to protect your entitlements as effectively as possible.
To best protect your entitlements from the company pension scheme, you should observe a few points. Keep all documents relating to your occupational pension carefully, especially the pension commitment and annual statements of your current status. Find out early about the vesting periods that apply to you – these depend on the date of the commitment. If you are planning to change employer, you should speak to your current and potential new employer at least three months in advance to clarify the options for your occupational pension. Clarify whether a transfer of the capital is possible or whether you can continue the contract privately. Our expert tip: document all agreements in writing. If anything is unclear or the situation is complex, for example in the case of international moves or employer insolvency, professional advice is advisable. Remember that, where contributions are made by salary sacrifice, your entitlements become vested immediately, giving you a high level of security. Make use of your employer’s and the provider’s information obligations. This way, you will always keep track of your valuable retirement entitlements.
More useful links
The Federal Agency for Civic Education (bpb) provides comprehensive information on the vesting of company pension entitlements.
Under Laws on the Internet, you will find the Company Pensions Act (BetrAVG) in full text as a PDF document.
The German Pension Insurance explains the vesting of entitlements in its glossary.
The German Bundestag provides a document on occupational pension provision that offers in-depth insights.
The Hans Böckler Foundation offers a detailed publication on occupational pension provision as a PDF.
The aba - Working Group for Occupational Pensions e.V. defines the term vesting in its glossary.
The Federal Ministry of Labour and Social Affairs (BMAS) provides comprehensive information on occupational pension provision.
The Federal Ministry of Finance provides information on the Company Pension Strengthening Act.
FAQ
What deadlines apply to the vesting of my occupational pension?
For commitments from 01.01.2018 onwards, the following applies: your vested entitlement is non-forfeitable if, when you leave, you are at least 21 years old and the commitment has existed for at least three years. For older commitments, longer periods sometimes apply (e.g. five years’ commitment and age 25 for commitments from 2009-2017). In the case of salary conversion, the entitlements are vested immediately.
What happens to my occupational pension scheme if I change employer?
When you change employer, your vested entitlements remain in place. You can often make the contract paid-up, continue it privately or, in certain circumstances, have it transferred to your new employer (§ 4 BetrAVG). Clarify your options at an early stage.
Is my occupational pension scheme financed through salary sacrifice always vested?
Yes, entitlements from salary conversion are immediately vested by law under Section 1b(5) of the BetrAVG. This applies to your own contributions and the statutory employer subsidy.
How is the amount of my vested company pension calculated?
The calculation depends on the type of commitment (§ 2 BetrAVG). In the case of defined benefit commitments, it is often apportioned pro rata temporis (m/n method); for contribution-based commitments and salary conversion (from 2001), it is based on the contributions earned up to departure.
What protects my occupational pension entitlements if my employer becomes insolvent?
For many implementation routes (e.g. direct commitments, support funds, and in some cases pension funds and pension schemes), vested entitlements and ongoing benefits are protected by the Pension Protection Association (PSVaG). Direct insurance policies with irrevocable beneficiary rights generally do not fall under PSVaG protection, as the claim exists directly against the insurer.
Can my employer simply change or withdraw a promise once made?
A change to the pension commitment does not interrupt the running of the vesting periods. Once vesting has occurred, the employer can no longer revoke the entitlement under a direct insurance policy. Fundamental changes to existing commitments are only permissible under strict conditions.
