01
Salary conversion only
Employees convert salary, the employer pays the legal 15% top-up. Meets the law, rarely convinces anyone.
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Company pensions in Germany: what employers must offer and what staff should know
In Germany every employee can demand to convert part of their salary into a company pension, and the employer usually has to add 15%. For international teams the scheme works differently from a UK workplace pension or a US 401(k): there is no auto-enrolment by law, and the employer stays liable for what was promised.
The question almost everyone asks first
Do German employers have to offer a company pension?
Yes, on request. Under section 1a of the Company Pensions Act (BetrAVG), every employee in the statutory pension scheme may convert up to 4% of the contribution ceiling, €4,056 in 2026, into a company pension. If the employer has no scheme, the employee can insist on a direct insurance policy. The employer must add a flat 15% of the converted salary for direct insurance, pension funds and Pensionskassen, to the extent it saves social security contributions.
How it differs from a UK workplace pension or a 401(k)
There is no statutory auto-enrolment in Germany. Staff must actively ask for salary conversion, unless the employer runs an opt-out model under a collective agreement or, since 2026, under a works agreement. Contributions are tax-free up to €8,112 in 2026 and free of social security up to €4,056.
The bigger difference is liability. German law treats a company pension as a promise by the employer. If an insurer or Pensionskasse pays less than promised, the employer must make up the difference. Only the 'social partner model', which requires a collective agreement, is a pure defined-contribution plan without guarantee.
Pension payouts are fully taxed later and, for members of statutory health insurance, subject to health and care contributions above an allowance of €197.75 a month in 2026. For most employees the scheme is still worth it, especially with the employer top-up. We advise on the insurance routes, not on individual funds.
International staff: moving jobs and leaving Germany
Contracts from salary conversion belong to the employee from day one. When changing jobs within Germany, the employee can transfer the value to the new employer within one year (section 4 BetrAVG) or keep the contract, either paid-up or continued privately.
When leaving Germany, the pension usually stays in the German contract until retirement and is then paid abroad, taxed under the relevant double tax treaty. A cash-out is generally not possible, only very small entitlements may be settled. Employees from outside the EU should know this before converting large amounts.
What changed in 2026
The Second Company Pensions Strengthening Act has been in force since 22 January 2026, some parts from 2027. Employers without a collective agreement may now introduce automatic enrolment with an opt-out through a works agreement, if no pay agreements exist or are customary in their sector and they add a 20% top-up. The social partner model is also opened to employers outside collective bargaining.
For low earners, employers can claim back 30% of an additional employer-paid contribution through payroll tax (section 100 EStG). In 2026 this applies to monthly pay up to €2,575, with a maximum of €288 a year. From 2027 the maximum rises to €360 and the income limit is linked to the contribution ceiling.
What is covered
- Lifelong company pension or lump sum, depending on the scheme rules
- Survivor's pension for spouse and children, if agreed
- Disability pension as an add-on, if included
- Transfer to a new German employer within one year of leaving
- Immediate vesting of salary conversion
- Insolvency protection through the PSVaG for direct promises, support funds and pension funds
- Paid-up status during parental leave or long illness
- Payment of the pension to a foreign account after retirement
What is not covered
- No release of employer liability, except in the social partner model
- No guaranteed return on fund-linked plans
- No cash-out before retirement, apart from very small entitlements
- No exemption from health insurance contributions in retirement
- No statutory auto-enrolment outside opt-out schemes
Who needs it
- Every employer with staff, because the legal right applies from the first employee
- Companies recruiting international talent who compare benefits packages
- Employers with old contracts where the 15% top-up was never checked
- Managing shareholders who want a pension through their company
- Employees planning to stay in Germany until retirement
Who can do without
- Employees on short assignments who will leave Germany soon and need access to the money
Wheel of misfortune
Spin the wheel of bad luck
Six things that really happen. The wheel picks yours and shows who pays.
Cost:
Budget policy
Strong policy
See all six cases
- Leaving Germany and wanting cash, no loss, but money stays locked. Budget policy: does not pay, Strong policy: does not pay. Salary conversion contracts cannot simply be cashed out, apart from very small entitlements and a few special cases. The pension is paid abroad from retirement age.
- Employee unable to work at 45, the missing contributions until retirement. Budget policy: does not pay, Strong policy: pays. Without disability cover the contract is frozen and the pension shrinks. With it, the insurer keeps paying the contributions or pays a pension.
- Death before retirement, the accumulated capital. Budget policy: pays in part, Strong policy: pays. Basic plans pay the balance to a spouse or children. Strong ones add extra survivors' cover.
- Employer goes bankrupt, no loss if set up properly. Budget policy: pays, Strong policy: pays. Direct insurance belongs to the employee. Other routes are protected by the German pension guarantee fund, PSVaG.
- Stock crash shortly before retirement, part of the fund value. Budget policy: pays in part, Strong policy: pays in part. Contribution plans with minimum benefit guarantee what was paid in minus risk costs. Good plans shift into safer assets before retirement.
- New job, different pension provider, no loss if handled in time. Budget policy: pays, Strong policy: pays. Within one year of leaving you can ask to transfer the value, or keep the old contract.
What it costs
For the employer, the cost is the top-up, administration and, for some routes, insolvency insurance contributions. Against this stand saved social security contributions, which are usually higher than the 15% top-up. For employees, the net cost is what matters: a €100 contribution often costs well under €100 net, depending on tax class and income.
What drives the premium
- Funding route and type of promise
- Employer contribution above the legal minimum
- Number of employees and participation rate
- Plan costs, usually lower under a group framework contract
- HR and payroll workload
- Insolvency insurance contributions for internal routes and pension funds
No fixed benchmarks, as contributions depend on salary and scheme rules. Tax and social security limits as of 2026. Costs and benefits are fixed only in the quote.
The policy levels on the market
02
Enhanced employer contribution
The employer adds, for example, 20% to 50% or a fixed monthly amount. A strong retention tool for international hires.
03
Company pension plan with written rules
One concept for all staff, with a pension regulation, a single provider, a group contract and digital administration. The standard for firms with around ten or more employees.
How to recognise a good policy
| Criterion | Minimum standard | Strong policy | Why it matters |
|---|---|---|---|
| Type of promise | defined contribution with minimum benefit | clearly documented in a written pension regulation | The type of promise decides what the employer is liable for. |
| Plan costs | group contract with reduced acquisition costs | effective costs below 1% a year | High early costs reduce the value the employer stands behind. |
| Portability | transfer under section 4 BetrAVG | insurer has joined the industry transfer agreement | New hires bring contracts, leavers take them along. |
| English-language service | German documents only | English information and online portal | Staff only value a benefit they understand. |
| Administration | paper-based | digital portal linked to payroll | HR time is often the real cost. |
| Contribution holiday | paid-up status | restart without new costs after parental leave or illness | Career breaks should not penalise the employee. |
| Add-ons | retirement benefit only | disability and survivor cover with simplified health questions | Group schemes can insure people who would struggle to get individual cover. |
Insurers on the German market
Company pensions are provided by life insurers, Pensionskassen and pension funds, usually under group framework contracts with lower costs than individual policies. This list is a market overview and says nothing about which providers we work with.
| Insurer | Background |
|---|---|
| Allianz | direct insurance; the group also runs its own Pensionskasse and pension fund |
| Alte Leipziger | mutual insurer with its own Pensionskasse and pension fund, broker channel |
| R+V Pensionsfonds | pension fund of the cooperative R+V group |
| Swiss Life | part of the Swiss Life group, also runs a Pensionskasse and pension fund in Germany |
| HDI | part of the Talanx group, focus on corporate clients |
| Stuttgarter | mutual insurer, broker channel |
| WWK | mutual insurer with its own pension fund |
| NÜRNBERGER | group includes a Pensionskasse, agents and brokers |
From the BaFin register
229
229 insurers supervised by BaFin, the German regulator, are licensed for this class of insurance. (Lebensversicherer, Pensionskassen und Pensionsfonds)
Show all 229 names from the register
- ACM Lebensversicherung AG
- AGER Lebensversicherung AG
- Aioi Nissay Dowa Life Insurance of Europe Aktiengesellschaft
- Allgemeine Rentenanstalt Pensionskasse AG
- Allianz Lebensversicherungs-Aktiengesellschaft
- Allianz Pensionsfonds Aktiengesellschaft
- Allianz Pensionskasse Aktiengesellschaft
- Allianz Versorgungskasse Versicherungsverein a.G.
- Alte Leipziger Lebensversicherung auf Gegenseitigkeit
- ALTE LEIPZIGER Pensionsfonds AG
- ALTE LEIPZIGER Pensionskasse AG
- Alters- und Hinterbliebenen- Versicherung der Technischen Überwachungs-Vereine-VVaG-
- Angest.-Pensionskasse der dt. Geschäftsbetriebe der Georg Fischer Aktiengesellschaft Schaffhausen (Schweiz)
- Athora Lebensversicherung Aktiengesellschaft
- Athora Pensionskasse Aktiengesellschaft
- AXA Lebensversicherung Aktiengesellschaft
- Baden-Badener Pensionskasse VVaG
- Baloise Lebensversicherung Aktiengesellschaft Deutschland
- BASF Pensionskasse VVaG
- Bayer-Pensionskasse VVaG
- Bayern-Versicherung Lebensversicherung Aktiengesellschaft
- Betriebspensionskasse der Firma Carl Schenck AG VVaG Darmstadt
- BL die Bayerische Lebensversicherung AG
- Bosch Pensionsfonds Aktiengesellschaft
- BVV Pensionsfonds des Bankgewerbes AG
- BVV Versicherungsverein des Bankgewerbes a.G.
- BY die Bayerische Vorsorge Lebensversicherung a.G.
- CHEMIE Pensionsfonds AG
- Concordia oeco Lebensversicherungs-AG
- Condor Lebensversicherungs-Aktiengesellschaft
- Continentale Lebensversicherung AG
- Cosmos Lebensversicherungs-Aktiengesellschaft
- Credit Life AG
- Debeka Lebensversicherungsverein auf Gegenseitigkeit Sitz Koblenz am Rhein
- Debeka Pensionskasse AG
- Debeka Zusatzversorgungskasse VaG
- Delta Direkt Lebensversicherung Aktiengesellschaft München
- Deutsche Lebensversicherungs-Aktiengesellschaft
- Deutsche Post Pensionsfonds AG
- Deutsche Ärzteversicherung Aktiengesellschaft
- Deutscher Pensionsfonds Aktiengesellschaft
- DEVK Allgemeine Lebensversicherungs-Aktiengesellschaft
- DEVK Deutsche Eisenbahn Versicherung Lebensversicherungsverein a.G. Betriebliche Sozialeinrichtung der Deutschen Bahn
- DEVK Pensionsfonds Aktiengesellschaft
- Dialog Lebensversicherungs-Aktiengesellschaft
- DIREKTE LEBEN Versicherung AG
- Dortmunder Lebensversicherung AG
- DPK Deutsche Pensionskasse AG
- Dresdener Pensionskasse VVaG
- Entis Lebensversicherung AG
- ERGO Lebensversicherung Aktiengesellschaft
- ERGO Pensionsfonds Aktiengesellschaft
- ERGO Pensionskasse Aktiengesellschaft
- ERGO Vorsorge Lebensversicherung Aktiengesellschaft
- EUROPA Lebensversicherung Aktiengesellschaft
- Frankfurt Münchener Lebensversicherung AG
- Frankfurter Lebensversicherung AG
- Frankfurter Pensionskasse AG
- Generali Deutschland Lebensversicherung AG
- Generali Pensionsfonds AG
- Geno Pensionskasse VVaG, Karlsruhe
- Gerling Versorgungskasse
- Glatfelter Gernsbach Pensionskasse VVaG
- Gothaer Lebensversicherung Aktiengesellschaft
- Gothaer Pensionskasse AG
- Grün + Bilfinger Wohlfahrts-und Pensionskasse a.G., c/o LDIS GmbH
- HAMBURGER PENSIONSFONDS Pensionsfondsverein auf Gegenseitigkeit
- HAMBURGER PENSIONSKASSE VON 1905 Versicherungsverein auf Gegenseitigkeit
- HAMBURGER PENSIONSRÜCKDECKUNGSKASSE Versicherungsverein auf Gegenseitigkeit
- Hannoversche Alterskasse VVaG
- Hannoversche Lebensversicherung AG
- Hannoversche Pensionskasse VVaG
- HanseMerkur Lebensversicherung AG
- HDI Lebensversicherung AG
- HDI Pensionsfonds Aktiengesellschaft
- HDI Pensionskasse AG
- HDI Vorsorge Lebensversicherung AG
- HEAG Pensionszuschusskasse Versicherungsverein auf Gegenseitigkeit
- Heidelberger Lebensversicherung AG
- HELVETIA schweizerische Lebensversicherungs-Aktiengesellschaft
- HUK-COBURG-Lebensversicherung AG
- HVB Trust Pensionsfonds AG
- Höchster Pensionskasse VVaG
- IBM Deutschland Pensionsfonds AG
- IBM Deutschland Pensionskasse Versicherungsverein auf Gegenseitigkeit
- IDEAL Lebensversicherung a.G.
- INTER Lebensversicherung AG
- InterRisk Lebensversicherungs-AG Vienna Insurance Group.
- Itzehoer Lebensversicherungs-Aktiengesellschaft
- Lebensversicherung von 1871 auf Gegenseitigkeit München
- Lifestyle Protection Lebensversicherung AG
- Lippische Pensionsfonds AG
- LPV Lebensversicherung AG
- LVM Lebensversicherungs-AG
- LVM Pensionsfonds-AG
- Mecklenburgische Lebensversicherungs-Aktiengesellschaft
- MER-Pensionskasse VVaG
- Mercedes-Benz Pensionsfonds AG
- Mercer Pensionsfonds AG
- Metzler Mittelstands Pensionsfonds AG
- Metzler Pensionsfonds AG
- Metzler Sozialpartner Pensionsfonds AG
- myLife Lebensversicherung AG
- MÜNCHENER VEREIN Lebensversicherung AG
- Müllerei-Pensionskasse Versicherungsverein a.G. (MPK)
- Münchener Rück Versorgungskasse
- NESTLÉ PENSIONSKASSE
- NESTLÉ RÜCKDECKUNGSKASSE
- Nestlé Pensionsfonds AG
- neue leben Lebensversicherung Aktiengesellschaft
- neue leben Pensionskasse Aktiengesellschaft
- NÜRNBERGER Lebensversicherung Aktiengesellschaft
- NÜRNBERGER Pensionskasse Aktiengesellschaft
- Pensionskasse Berolina VVaG
- Pensionskasse Degussa Versicherungsverein auf Gegenseitigkeit
- Pensionskasse der BERLIN-KÖLNISCHE Versicherungen
- Pensionskasse der Bewag
- Pensionskasse der BHW Bausparkasse
- Pensionskasse der BOGESTRA
- PENSIONSKASSE DER CREOS UND ENOVOS DEUTSCHLAND VVAG
- Pensionskasse der EDEKA Organisation V.V.a.G.
- Pensionskasse der Frankfurter Sparkasse
- Pensionskasse der Genossenschaftsorganisation Versicherungsverein auf Gegenseitigkeit
- PENSIONSKASSE der Hamburger Hochbahn Aktiengesellschaft - VVaG -
- Pensionskasse der HELVETIA Schweizerische Versicherungsgesellschaft, Direktion für Deutschland
- Pensionskasse der HypoVereinsbank
- Pensionskasse der Lotsenbrüderschaft Elbe
- Pensionskasse der Mitarbeiter der ehemaligen Frankona Rückversicherungs-AG V.V.a.G.
- Pensionskasse der Mitarbeiter der Hoechst-Gruppe VVaG
- Pensionskasse der Novartis Pharma GmbH in Nürnberg Versicherungsverein auf Gegenseitigkeit
- Pensionskasse der Rechtsanwälte und Notare VVaG
- Pensionskasse der Schülke & Mayr GmbH V.V.a.G. c/o Aon Solutions Germany GmbH
- Pensionskasse der Vereinigten Hagelversicherung VVaG
- Pensionskasse der VHV-Versicherungen
- Pensionskasse der Wacker Chemie Versicherungsverein a.G.
- Pensionskasse der Wasserwirtschaftlichen Verbände Essen VVaG
- Pensionskasse der Württembergischen
- Pensionskasse des BDH Bundesverband Rehabilitation, VVaG
- Pensionskasse Deutscher Eisenbahnen und Straßenbahnen VVaG
- PENSIONSKASSE Deutscher Genossenschaften VVaG
- Pensionskasse Dynamit Nobel Versicherungsverein auf Gegenseitigkeit
- Pensionskasse für Angestellte der Continental Aktiengesellschaft VVaG
- Pensionskasse für die Angestellten der BARMER Ersatzkasse VVaG
- Pensionskasse für die Arbeitnehmerinnen und Arbeitnehmer des ZDF Versicherungsverein auf Gegenseitigkeit
- Pensionskasse für die Deutsche Wirtschaft vormals Pensionskasse der chemischen Industrie Deutschlands
- Pensionskasse HT Troplast Versicherungsverein auf Gegenseitigkeit
- Pensionskasse Konzern Versicherungskammer Bayern VVaG
- Pensionskasse Maxhütte VVaG
- PENSIONSKASSE PEUGEOT DEUTSCHLAND VVaG
- Pensionskasse Rundfunk
- Pensionskasse Schenker VVaG
- Pensionskasse SIGNAL Versicherungen VVaG
- Pensionskasse vom Deutschen Roten Kreuz VVaG
- Philips Pensionskasse (Versicherungsverein auf Gegenseitigkeit)
- Phoenix Pensionskasse von 1925 Versicherungsverein auf Gegenseitigkeit
- Pro bAV Pensionskasse AG
- Protektor Lebensversicherungs-AG
- Provinzial Lebensversicherung Aktiengesellschaft
- Provinzial Lebensversicherung Hannover
- Provinzial Pensionskasse Hannover AG
- Proxalto Lebensversicherung Aktiengesellschaft c/o Viridium Group GmbH & Co. KG
- PRUDENTIA Pensionskasse AG
- R + V Lebensversicherung a.G.
- R + V LEBENSVERSICHERUNG AKTIENGESELLSCHAFT
- R+V Pensionsfonds Aktiengesellschaft
- R+V PENSIONSKASSE AKTIENGESELLSCHAFT
- R+V PENSIONSVERSICHERUNG a.G.
- Rentenzuschusskasse der N-ERGIE Aktiengesellschaft Nürnberg
- Rheinische Pensionskasse VVaG
- Ruhegeldkasse der Bremer Straßenbahn (VVaG)
- RWE Pensionsfonds AG
- Siemens Pensionsfonds AG
- SIGNAL IDUNA Lebensversicherung a. G.
- SIGNAL IDUNA Lebensversicherung AG
- SIGNAL IDUNA Pensionskasse Aktiengesellschaft
- Skandia Lebensversicherung Aktiengesellschaft
- Sparkassen Pensionsfonds AG
- Sparkassen Pensionskasse AG
- Sparkassen-Versicherung Sachsen Lebensversicherung Aktiengesellschaft
- Stuttgarter Lebensversicherung a.G.
- SV SparkassenVersicherung Lebensversicherung Aktiengesellschaft
- SV SparkassenVersicherung Pensionsfonds AG
- Swiss Life Lebensversicherung SE
- Swiss Life Pensionsfonds Aktiengesellschaft
- Swiss Life Pensionskasse Aktiengesellschaft
- Telekom-Pensionsfonds a.G.
- TK Pensionsfonds AG
- uniVersa Lebensversicherung a.G.
- VdW Pensionsfonds AG
- VEREINIGTE POSTVERSICHERUNG VVaG
- VERKA PK Kirchliche Pensionskasse AG
- VERKA VK Kirchliche Vorsorge VVaG
- Versicherer im Raum der Kirchen Lebensversicherung AG
- Versicherungskammer Bayern Pensionskasse Aktiengesellschaft
- Versorgungsanstalt des Bundes und der Länder
- Versorgungsausgleichskasse Pensionskasse VVaG
- Versorgungskasse der Angestellten der GEA Group Aktiengesellschaft VVaG
- Versorgungskasse der Angestellten der Norddeutschen Affinerie
- Versorgungskasse der Deutscher Herold Versicherungsgesellschaften,Versicherungsverein a.G., Köln
- Versorgungskasse der ehemaligen Bayernwerk AG, Versicherungsverein auf Gegenseitigkeit
- Versorgungskasse der Firma M. DuMont Schauberg Expedition der Kölnischen Zeitung
- Versorgungskasse der Volksfürsorge VVaG
- Versorgungskasse Deutscher Unternehmen, Versicherungsverein auf Gegenseitigkeit
- Versorgungskasse f. d. Angest. d. AachenMünchener Versicherung AG u.d. Generali Deutschland AG
- Versorgungskasse Gothaer Versicherungsbank VVaG
- Versorgungskasse Radio Bremen
- VIFA Pensionsfonds AG
- VLAK VVaG Hannover c/o LPBC GmbH
- Volkswohl-Bund Lebensversicherung a.G.
- VPV Lebensversicherungs-Aktiengesellschaft
- WGV-Lebensversicherung AG
- WTW Pensionsfonds AG
- Wuppertaler Pensionskasse VVaG
- WWK Lebensversicherung auf Gegenseitigkeit
- WWK Pensionsfonds Aktiengesellschaft
- Württembergische Lebensversicherung Aktiengesellschaft
- Zentrales Versorgungswerk für das Dachdeckerhandwerk VVaG
- Zurich Deutscher Herold Lebensversicherung Aktiengesellschaft
- Zurich Life Legacy Versicherung AG (Deutschland)
- Zusatzversorgungskasse der Steine- und Erden-Industrie u. des Betonsteinhandwerks VVaG Die Bayerische Pensionskasse
- Zusatzversorgungskasse des Baugewerbes AG
- Zusatzversorgungskasse des Dachdeckerhandwerks VVaG
- Zusatzversorgungskasse des Gerüstbaugewerbes VVaG
- Zusatzversorgungskasse des Maler- und Lackiererhandwerks VVaG
- Zusatzversorgungskasse des Steinmetz- und Steinbildhauerhandwerks VVaG
- Zusatzversorgungskasse für die Beschäftigten der Deutschen Brot- und Backwarenindustrie VVaG
- Zusatzversorgungskasse für die Beschäftigten des Deutschen Bäckerhandwerks VVaG
- Zusatzversorgungswerk für Arbeitnehmer in der Land- und Forstwirtschaft - ZLF VVaG
- Öffentliche Lebensversicherung Sachsen-Anhalt
Source: BaFin company database, retrieved 18 September 2026. Insurers from other EU countries selling through a branch or without a German office are not included.
Legal basis and sources
Products and add-ons
Direct insurance (Direktversicherung)
A life insurance policy taken out by the employer on the employee's life. The most common route in small and medium firms.
Pensionskasse
A separate pension institution supervised by BaFin, taxed like direct insurance.
Pension fund (Pensionsfonds)
More investment freedom, insolvency insurance contributions payable. Also used to move existing pension promises off the balance sheet.
Support fund (Unterstützungskasse)
Allows contributions above the tax-free limits for managers and directors, usually backed by reinsurance.
Direct promise (Direktzusage)
The company promises the pension itself and books provisions. Normally combined with reinsurance.
Social partner model
Pure defined contribution without guarantee, based on a collective agreement. The employer owes only the contribution.
Myth or truth
True or false?
Five things people say about this insurance. Guess first, then see the answer.
Salary conversion can slightly lower your future German state pension.
This is true.
True. Converted salary is free of pension contributions, so you earn fewer state pension points. The company pension usually more than makes up for it.
Taking a lump sum avoids health insurance contributions in retirement.
This is false.
Not for statutory members. The lump sum is spread over ten years and contributions are charged on each monthly portion.
Germany has a fund that protects company pensions if the employer goes bust.
This is true.
Yes. Employers with direct promises or support funds pay into the Pensions-Sicherungs-Verein, which steps in on insolvency.
The employer's 15% top-up is paid on top of your conversion.
This is true.
Correct. It is an extra contribution, not a deduction from your salary conversion.
You lose employer-funded pension rights if you leave within five years.
This is false.
Not anymore. Since 2018, rights vest after three years of the promise and from age 21. Rights from your own salary conversion are yours from day one.
Common mistakes
- Assuming staff are auto-enrolled as in the UK
- Not paying the 15% top-up on older contracts
- Having no written pension regulation
- Not documenting advice to employees who decline
- Taking over contracts brought by new hires without checking them
- Letting short-term expats convert large sums they cannot access later
Questions and answers
Frequently asked
How much can go into a German company pension tax-free in 2026?
Up to €8,112 a year, which is 8% of the €101,400 contribution ceiling. Of that, only €4,056 is also free of social security. The limit applies jointly to direct insurance, Pensionskasse and pension fund.
Can I cash out my German company pension when I leave the country?
Generally no. The pension stays in the contract and is paid out at retirement, also abroad. Only very small entitlements may be settled with a lump sum, and that is the employer's decision, not the employee's.
Does the employer have to pay the 15% top-up for high earners?
Not if salary is above the pension contribution ceiling, because the employer then saves no social security. The top-up is tied to actual savings. Collective agreements may set different rules.
What happens to my company pension when I change jobs in Germany?
Salary conversion vests immediately. You can keep the contract paid-up, continue it privately or, within one year, transfer its value to your new employer. Employer-funded parts vest after three years if you are at least 21.
Is a company pension taxed when it is paid out?
Yes, fully as income, because contributions were tax-free. Members of statutory health insurance also pay health and care contributions on it above an allowance of €197.75 a month in 2026.
Is the employer liable if the pension provider cuts benefits?
Yes. Under section 1 BetrAVG the employer must make up any shortfall against the promised benefit. The exception is the social partner model, where only the contribution is owed.
Can we offer an opt-out scheme without a collective agreement?
Since the 2026 reform, yes, through a works agreement, if no pay agreements exist or are customary in your sector and you add a 20% employer top-up. Employees are enrolled automatically and may decline.
Which route suits a small startup with an international team?
Usually direct insurance under a group framework contract: little admin, no insolvency insurance contributions and easy transfer when people move on. English-language information for staff is worth asking for.
Are there subsidies for low earners?
Yes. Employers can reclaim 30% of an additional contribution for staff earning up to €2,575 a month in 2026, up to €288 a year per person. From 2027 the maximum rises to €360.
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Often goes with it
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Should I take out a German private pension if I might leave Germany?
Do I need occupational disability insurance if I have just moved to Germany?
Can I be personally liable as managing director of a German GmbH?
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