Since 2002 every employee in Germany has a legal right to convert part of their salary into an occupational pension (betriebliche Altersvorsorge, bAV). Whether it pays off is a separate question. The employer’s view: bAV for employers.

Your right: salary conversion (§ 1a BetrAVG)

  • Convert up to 4 % of the pension contribution ceiling from gross pay – €4,056 a year in 2026 (€338 a month). If the employer offers no Pensionskasse or Pensionsfonds, you may demand a direct insurance (Direktversicherung).
  • 15 % employer top-up where the employer saves social contributions (§ 1a (1a) BetrAVG) – since 2019 for new and since 2022 for all contracts.

The 2026 subsidy

  • Tax-free up to 8 % of the ceiling: €8,112 (§ 3 No. 63 EStG); free of social contributions only up to 4 %: €4,056 (§ 1 SvEV).
  • The logic: convert €100 gross and you would have seen clearly less than €100 net; the contract receives the full €100 plus at least €15. The lever depends on your tax rate – never trust blanket promises.
  • Low earners (§ 100 EStG): if the employer adds €240–960 a year for someone earning no more than €2,575 gross a month, the state refunds 30 % (max. €288). From 1 January 2027 the limits rise to 3 % of the ceiling, €1,200 contribution and €360 refund (Second Occupational Pensions Strengthening Act, 21 January 2026).

The catches

  1. Fully taxable in retirement (§ 22 No. 5 EStG) – usually still a gain, not for everyone.
  2. Health insurance: statutorily insured pensioners pay the full health and care contribution on the company pension above an allowance of €197.75 a month (2026, § 226 (2) SGB V) – health insurance only; in care insurance it is merely a threshold. Privately insured retirees are not affected.
  3. Lower state pension: fewer pension points up to the 4 % limit; sick pay, unemployment and disability benefits shrink too. Consumer advice centres consider 15 % often too small to compensate.
  4. Contract costs – ask for the disclosure.

Changing jobs, insolvency, auto-enrolment

  • Vesting: your own contributions are yours immediately (§ 1b (5) BetrAVG); employer-financed promises vest from age 21 after three years.
  • Portability (§ 4 BetrAVG): demand transfer to the new employer within one year, up to the ceiling.
  • Insolvency: direct commitments, support funds and Pensionsfonds are protected by the PSV (§ 7 BetrAVG); with direct insurance your own beneficiary right protects you.
  • Opting out (§ 20 BetrAVG): automatic enrolment with at least one month to object; via a works agreement without a collective agreement the employer must add at least 20 %.

How to proceed

  1. Ask for vehicle, provider, top-up and cost disclosure – or demand your direct insurance.
  2. Calculate the top-up: 15 % is the minimum; more makes the case.
  3. Check your later health-insurance status and keep portability in mind when changing jobs.

General information, not legal, tax or investment advice. Sources: Occupational Pensions Act (§§ 1a, 1b, 4, 7, 20 BetrAVG), German Income Tax Act (§§ 3 No. 63, 22 No. 5, 100 EStG), § 1 SvEV, § 226 SGB V, Social Insurance Reference Values Ordinance 2026, Second Occupational Pensions Strengthening Act (BGBl. 2026 I, 21 January 2026), Deutsche Rentenversicherung, consumer advice centres – as of October 2026. Want your bAV offer checked before you sign? Get in touch.